Three weeks ago I got on the phone with the new team at Agami – a well funded startup in the NAS space with big name VC's ready to for a "do over". The past regime spent a lot of dough I guess but built a product with no market – it was too late and too limited on the high-end and too expensive and complicated on the low-end. I had heard that Wendell Wilson had gone there as VP of Marketing and Mike McGuire (STK/Sun) as VP of Sales. ESG Strategic Consultant Tim Lieto, who ran Sun Americas for a few years, spoke highly of Mike, and I knew Wendell from Pillar, so I wanted to hear the story.
What you don't normally realize unless you live in a world of startups and VC's is that almost every fledgling company goes through a re-start sooner or later. It's inevitable even with established company's and markets, so it's effectively guaranteed with startups who have nothing but their beliefs initially. By the time you get through fund raising and building whatever it is you are building, the world will have moved on, and even if your assumptions were right on up front, they will require adaptation today, and more tomorrow.
I am used to restarts, the fact that everything takes twice as long as it should and costs twice as much are lessons I learned long ago. Things happen. When I dialed into the briefing to hear from the Agamites I did so figuring I'd hear what went wrong and the new plan to set things right. Instead, I got a bit of the opposite.
I listened to new(er) CEO David Stiles first go through his pedigree of success. He started something and sold it to someone huge for a zillion bucks. Then he ran something else and sold it to someone else huge for 2 zillion bucks. I think he might have even done it three times. The numbers he tossed around had B as in Billions in them. Wow. Who runs 3 different companies and sells them all for more than a billion clams? I'm ok listening to self-promotion of folks like that, because the first thing that goes through my mind is that I might just learn something.
Anyway, David talked – a lot. More than me, and let's face it, that is no easy feat. He talked about the new development program and the new features and technology in painful detail. He spoke of the previous failures of the company in product and technology terms. The argument was one I've heard a lot – the box wasn't fast enough, big enough, and lacked some massively critical feature or two. Normally, I would have begun my attack at this point, as that argument is ONLY ever valid at the very beginning of a market where dominance has yet to be established. It is never valid if you are the 84th entrant into a market that is well into the mature phase. But, he sold 3 companies for a trillion dollars, so I listened. Terri McClure listened. Wendell and Mike listened. Eventually we got through the weeds and I asked one simple question, "what market are you going after?" The good news is that he responded immediately – indicating that this was not the first time this topic was broached or considered. The bad news was the answer – "NetApp". The plan was to build a NAS system that would be cheaper and better than NetApp's products. Beating NetApp was the goal. Oops.
As you probably guessed, I didn't agree with that plan. Not just because NetApp is a formidable foe, has way more engineering, sales, support, management (etc.) talent than Agami could ever put together within a reasonable time frame, but because that strategy never works.
The only time a backward looking strategy based on beating the market leader in a mature market ever seems to work is under one condition: external environmental factors radically alter the market requirements and the incumbent leader refuses to adapt, thus opening the door to competition. In growth markets – and IT (and certainly data) is a growth market – buyers do not spend significant time looking at replacing technologies or vendors that have found a home within their environment – because it isn't worth it. "Good enough" is just that, it's good enough. Only when it isn't good enough – and even then it tends to have to be outrageously painful – do people really bother going through the exercise of switching out one thing for another. Is the EMC Symm the best array on the planet for core transactional systems? No. Is the Cisco core networking box the best you can buy? No. Is Oracle the best database technology you can find? No. Who cares? It doesn't matter. Those games are over. The only way Oracle will lose their market position is if they somehow miraculously go out of business or the market requirements evolve such that the very nature of the computing environments these leaders dominate becomes marginalized and eventually eliminated – which they will. These markets have been strong for almost 50 years so who knows how much longer they will run. In the meantime, chasing a market in reverse is a losing proposition.
So I'm not sure why Agami had the plug pulled, but I have to believe that at least partially it was because the market attack plan was fundamentally flawed. It would have been better to say "our intention is to buy a whole lot of lottery tickets and pray at lunch". In this case the company had the chance to adapt to new realities - there are plenty of white spaces they could go after - but nature doesn't often let you screw up twice. It's like having a start up that was building a home based TV tape playing system based on 9-track tapes, only to have the VCR market happen around you – and then when you return from your restart announcing that you have the best Betamax player in the world.
Market leaders have to adapt all of the time in order to stay successful. The best companies will not simply hold on to a market they already own, they will look to change the way they do things to lower their costs and increase their efficiency in established markets, and look for entire new use cases and business models that can enable them to move into adjunct or alternate markets. Once you dominate a market you can either harvest the profits and cash, invest and invent into new and different areas, or do both. Cisco and EMC have surely done both. NetApp spends more time both harvesting and investing in growth inside its core market, as they feel there is still more room to grow. No matter what, business needs weathermen – folks who can look at the forecast and try to predict what's coming that will potentially change the existing environment or unveil new opportunities that didn't exist previously.
You also have to play with the cards you are dealt. The Red Sox had to get rid of their idiot-savant cleanup hitter, Manny Ramirez – who may be one of the greatest pure hitters to ever play the game of baseball. Manny, alas, has the intelligence level of his bat, and has always been disruptive, but despite all of that his excellence at times and his major role in the success of the business (Two World Series titles in 4 years, if you are counting) folks were happy to overlook and understate this issues. Eventually, however, the superstar's brilliance becomes less important once the new order of the day takes place. The Red Sox went from laughable losers to a serious contender and a team that could challenge for the title for years to come. After winning a few titles (or markets), the dynamic of the team changed – goofy and silly antics that were fine a while ago were a distraction now. Selfish behavior was contrarian to the objectives of the team. One superstar, with all their greatness, can destroy a good team from inside the same way one superstar engineer can destroy a good company by refusing to adapt to the time at hand. Just because something worked yesterday does not mean it is absolute that it will work tomorrow. You are probably better off assuming the exact opposite. Enjoy LA Manny; your time here is past. It doesn't mean I don't love the guy and all he did here, but the fact that he couldn't adapt to the new realities meant he had to go. Plus, I'm fairly sure he can't spell "realities".
Which gets me to the Audi R8 – a late entrant into the supercar world, I got to bomb around the track in one the other day. It's cool looking, but it's no Ferrari. As a matter of fact, I'm not sure why anyone would buy one – because I look at that car the same as Agami – they are late to the party with product that has basically the same bells and whistles, that won't beat any of the leaders in performance, and that has a little lower price but still so expensive that at that part of the market no one cares about $150k versus $250k (as crazy as that sounds). I'd be shocked if they make money on that car.
Which gets me to Elvis Costello and the Police. I'm a punk. I love Elvis, and I liked the Police. I was never a Sting by his lonesome fan, but did enjoy the drunken college "so lonely" or "Roxanne" blaring out of speakers far too large for the 15 square foot dorm room. Now that I'm old, I find myself enjoying going to reunion tours of bands my age. Most are pathetic, but many are like good wine, they get better.
Elvis Costello is brilliant. He is one of the purest rock and roll song writers of the last 40 years. His songs are smart, interesting, and quick. His lyrics are as deep and complex as they come if you want to get into them, but if not you can dance around to the chorus and be just as happy. Elvis is the anti-rock star – he's the guy with a billion songs who is the same guy he was in 1978. I've seen him about 15 times I figure. You never know what you are going to get with Elvis, because he doesn't play for me – he plays for him. Elvis is a bit like NetApp. They both consistently put out great results year after year and for the most part stay way beneath the radar. Lots of others in their game have come and gone, but few have been truer to themselves and delivered with an almost boring degree of consistency. Each has also now attracted multiple generations of fans. I'm a long time fan of both. I've seen Elvis in giant venues and little clubs, and he is the exact same no matter what. I have seen NetApp go from zip to $4 billion, and they are the same people. Neither of them seems to get too caught up in their own glory. Not thinking you are more than you are is a good way to stay grounded – and must have something to do with longevity.
So I went to the Police reunion concert because A: I had never seen them, and B: because Elvis was opening up. I had little to no expectations for the Police – I came for Elvis. Elvis was great. He was classic Elvis, ripping out "pump it up" and "watching the detectives". "She's filing her nails while they're dragging the lake" may be the best line ever written in a song, in my opinion. His band is the same as it was in 1978 except for his bass player, as those two had some blowout many years ago and they never got past it. Sting came walking out and sang "Alison" with Elvis. It might have been one of the coolest things I've ever seen on stage. Sting didn't do the rock star thing and make it his own – he sang it exactly like Elvis did on the album. It was classy and poignant. In 2 minutes 25 years of assumptions about Sting became questioned. I had to adapt my thinking. Good thing I have ADD so that's no so hard for me.
The Police came out early. I expected the 3 man band to have 3 backup singers and at least a few extra bodies on stage playing and singing, as after all these guys are no spring chickens and a trio is about as tough as it gets when it comes to reproducing music. They came out all by their lonesome and proceeded to absolutely rip it up for two hours in one of the best shows I've ever seen. It was pure, naked music. Guitar, Bass, Drums – nowhere to hide.
Success ruins many bands and many companies. The Police did one album and found themselves the biggest band in the world way back when. They did a few more and then hated each other enough to stop playing. All the money, girls, and glory (and let's face it, the coolest job ever) and they couldn't keep it together to play with each other 2 hours a day? It happens to companies all of the time also. They go on some killer ride, make a ton of money, live large, and rarely get through the next phase. The company might go on, but rarely with the same band mates. Hired hands come along and things change.
Time heals all wounds, as they say, and either that or the gazillion dollars they must be raking in got the Police back together. Sting never looked back after the Police broke up – he made a fortune, did whatever he wanted musically (none of which I cared at all about), and most likely enjoyed life. Drummer Stuart Copeland was apparently the guy who couldn't deal with Sting and that's why they broke up. Copeland is a great drummer, and lived post Police as a composer and producer and did just fine for himself I guess. Andy Summers is the guitar player. I'm not sure Andy knew the Police ever broke up. I get the feeling that Andy was told to go back to his basement and keep practicing, and he did. Every company has an Andy – super talented, no desire to be the "guy", just along for the ride. Those guys are probably the hardest to find. Oblivious to the issues, they just show up and deliver. Andy is to the Police what Fred is to Howard Stern. Andy reminded me of the guy in Aerosmith that no one knows – the short guitarist that now looks frighteningly like a Muppet. Some rock stars don't age gracefully. Andy put on his best ridiculous Japanese lady shirt (he did have a South Park "who killed Kenny" guitar strap, which was cool) that didn't quite cover his now large midsection, strapped on a Strat, and had at it. He might be as clueless as he looks, but the man can play the guitar.
Sting played his Willie Nelsen like beat to death Fender Jazz bass all night – never once doing a change. Andy changed guitars exactly once. I love that. Mr. Copeland, a tremendously talented drummer for sure, had decided that the same goofy haircut he had at 13 still worked for him. It was totally grey now, and looked as ridiculous as Bruce Jenner prior to the even more ridiculous plastic surgery gone awry episode.
They ripped. They sounded absolutely great. The only cheating was one guy off to the side who chimed in occasionally with some filler or played a sample. Sting, who I really thought was going to be a pompous yutz, might be one of the best rockers ever. He walks out on stage in a skin tight shirt and looks like he is a 20 year old Olympic swimmer. He sings in that outrageously high voice and I figure there is no way he can still belt it out like that, and certainly not all night. It turns out that not only can he, he does –at full speed and full scream. Even more astounding, the guy does his own backup singing. I can't even explain how, but he sang all of the parts – and it still sounded great. It was nuts. Dude played, sang, and shook hands with everyone who wanted to. Suffice it to say that I'm a Sting and Police fan now. How many of us have almost coughed up a spleen just trying to sing Roxanne – let alone 30 other songs?
My poor comparison is this – imagine Larry Ellison sitting down and coding up a storm, being completely normal, getting down and dirty drinking Mountain Dew to make sure the new release gets out the door. It was like that. No pretense, no prima donna, no "glory days".
Assumptions can kill you. Adapt or perish.
Steve,
I do believe that Agami has a tough road going after NetApp. Can a comparative be made to EqualLogic going after EMC? One of the major differences is that the SAN market is 10 times the size of the NAS market. However there is no real competition to NetApp in the NAS space. I have often wondered why but maybe the market just doesn't need one. Another burning question is why doesn't Dell, HDS, HP, IBM acquire one of the upstart NAS companies to add to their storage portfolios? HP did acquire PolyServe but its not really a NAS solution. I think that the NAS market is so limited because in some part people still don't understand NAS technology or the market.
I saw the Police / Elvis show as well but last year and it was great. I was a Police fan way back when - I remember seeing them at Madison Sq. Garden with the Go Go's opening up for them years and years ago when Roxanne first came out. And I am an even bigger Elvis fan - I have seen Elvis play probably over 20 times and he embodies what you are saying around change but staying grounded. I also just went to see the Boss (not you - Bruce Springsteen) at Gilette and he is the best rock performer in the universe. Here is a guy in his late 50s with an amazing set of brilliant songs and still writing new stuff - and moving a crowd like no other. Great stuff.
Posted by: Tony Asaro | August 11, 2008 at 11:54 AM