> Salesforce vs. Siebel being a great example of exactly that.
While I agree with your statement, I had to look that up because it sounds interesting. In 1999, the year Salesforce was founded, Siebel was the dominant player in the CRM field, holding 45% of the market, so not precisely a small company.
More than a budget war against a deal-with-the-devil startup, what killed Siebel was its inertia. Siebel sold expensive in-your-premises software, while Salesforce sold SAAS, and emphasized a cheaper cloud model. Siebel didn't react until 2003(!), when it released its first cloud version. By tht time, the expertise of cloud solutions of Salesforce made Siebel look like an amateur.
Siebel surpassed 1 billion revenue in 2000, while Salesforce did it until 2009. They had their chance.
I still agree that even if a small company did everything right, another one with more money and no fear of heavy losses would eat their lunch even if their product was inferior.
I'm not arguing with you, I just like talking about this, because Siebel himself has engaged in a huge disinformation campaign about what happened (he wanted to save his reputation and eventually launch c3.whatever). I've even personally listened to him bitch about HBS/GSB case studies about Siebel.
>In 1999, the year Salesforce was founded, Siebel was the dominant player in the CRM field, holding 45% of the market, so not precisely a small company.
Sure, but CRM was a new market back then (many argue that Siebel invented CRM) and Siebel was roughly equal in revenue scale to Peoplesoft and c. 10% the revenue scale of Microsoft. It would be very hard for anyone to argue that they ran out of space to grow (vs. choosing to slow down growth for profitability, especially in light of the dot-com crash)
>More than a budget war against a deal-with-the-devil startup, what killed Siebel was its inertia. Siebel sold expensive in-your-premises software
One great way to stop being an expensive piece of software and to grow faster is to lower your prices (but then you run the risk of becoming unprofitable).
Also worth noting that in 2000, Siebel spent c. 33% of revenue on Sales and Marketing, while Salesforce chose to spend 500%+ of revenue in the same period.
>while Salesforce sold SAAS, and emphasized a cheaper cloud model. Siebel didn't react until 2003(!), when it released its first cloud version.
Again, Seibel chose to spend 13% of revenue on product development in 2000. Easy to crush competition, but only if you're willing to spend for it.
>Siebel surpassed 1 billion revenue in 2000, while Salesforce did it until 2009. They had their chance.
Exactly, and choosing to harvest profit out of that $1bn of revenue too early is what did them in (though arguably, they are still probably something like $1-2bn of market cap for Oracle).
Seibel is and always will be the perfect example of disruption/the innovator's dilemma, which ultimately boils down to 'if you're comfortable with your current profits and not worried about growing top-line revenue, you will likely lose both.'
While I agree with your statement, I had to look that up because it sounds interesting. In 1999, the year Salesforce was founded, Siebel was the dominant player in the CRM field, holding 45% of the market, so not precisely a small company.
More than a budget war against a deal-with-the-devil startup, what killed Siebel was its inertia. Siebel sold expensive in-your-premises software, while Salesforce sold SAAS, and emphasized a cheaper cloud model. Siebel didn't react until 2003(!), when it released its first cloud version. By tht time, the expertise of cloud solutions of Salesforce made Siebel look like an amateur.
Siebel surpassed 1 billion revenue in 2000, while Salesforce did it until 2009. They had their chance.
I still agree that even if a small company did everything right, another one with more money and no fear of heavy losses would eat their lunch even if their product was inferior.