Zach Nelson: A Decade in the Clouds

Zach Nelson is a really interesting tech executive. He has a wide rolodex (over 20 pages in my last book, The New Polymath came from interviews with Zach and several others he introduced me to), diverse interests (numerous relationships with the Oakland Athletics baseball team, part owner of the Omaha Nighthawks football team, golfer), and he is entering his tenth year as CEO of the cloud computing pioneer, NetSuite. 

Every conversation with him veers in many fascinating directions. I recently had a chance to listen to him reminisce about his decade at NetSuite.

Given your big company experience at Oracle and Sun, and the dot.com bust, was it not a very risky decision for you in 2002 to join a startup like NetSuite?

Actually my career has always been about doing startups, though within large companies. At Network Associates, I helped roll out both MyCIO.com and McAfee.com (which interestingly enough was actually the first Cloud IPO way back in 2000). At Oracle, I was there when we launched video on demand and Interactive TV. At Sun, I headed up marketing in the SunSoft/Solaris spin-off.

So, joining a young company was not much of a challenge, but I did have 5 criteria guiding my job search, and amazingly NetSuite (then called NetLedger) met them all. I wanted to be with a Web-based enterprise software company. The term SaaS had not been coined then, but my experience with McAfee.com and MyCIO.com taught me customers preferred software from vendors who not only wrote the code but also managed it, and that the web had to be an integral part of the deployment/delivery platform. NetSuite fit that bill.

I wanted a great development team. (Founder) Evan Goldberg had that in place.

Given the dot.com bust, I wanted to join a startup which had real customers, not just ideas. I also wanted to see a good funding plan. NetSuite already had thousands of small customers, and having Larry Ellison (Chairman and CEO of Oracle) as a major investor met my 3rd and 4th criteria.

My last criterion, looking back, was possibly the most unreasonable. I wanted a short commute. If you remember traffic during the dot.com boom in the Bay Area, we were all commuting for hours. NetSuite, amazingly, was just 3 miles from where we live.

So, in many ways, it was actually an easy decision for me to join NetSuite.

Over the last decade, the highs must have been really high, the lows really low. Can you share a few of each?

In many ways, it has been one long high, but the last couple of years have been particularly satisfying. Even though NetSuite continued to grow during the downturn, nobody can say he or she enjoyed the slowdown of 08 and 09. However, those years focused our investments in two areas that have really paid off for NetSuite and our customers: the verticalization of our product and our company, and the traction the OneWorld product has provided us in global customers.

Looking ahead, two things really excite me. One is our exposure to large enterprise customers shows us how poorly their current legacy systems work and what a huge opportunity we have there. The second is the emergence of new opportunities in the emerging eCommerce market. There really is no platform for easily extending your transactional processes to customers, partners and vendors via ecommerce, and I think we have a very differentiated approach there.

But bigger companies tend to prefer working with larger vendors like SAP, don’t they?

When you see how companies deploy applications like SAP, you quickly see that approach is dated. Any company that has a multi-year road map to deploy enterprise systems will be crushed by faster, more nimble competitors who are moving their operations to the Cloud using NetSuite.

I used to worry about SAP and Microsoft making a move to the Cloud. But after waiting year after year for them, I now believe whatever they do in Cloud Computing is superficial. SAP may throw marketing around for BusinessbyDesign or Microsoft Dynamics Great Plains, but fundamentally their DNA remains that of on-premise software companies. And smart customers know that those applications will not give them competitive advantage in the Internet Age.

NetSuite has been a risk-taker on many fronts. You used the auction method for your IPO. You expanded internationally in relatively risky markets like the Philippines. How do you sustain a risk taking culture?

These are calculated risks. In each of those decisions I have bet on an executive I felt comfortable with.

For the IPO, we bet on Bill Hambrecht and his firm’s auction model and philosophy. For our Philippines expansion or the Czech development effort, again I bet on strong executives to make us successful.  It is as much about the people you have to execute a strategy as it is about the strategy itself.

You seem remarkably compatible with (founder) Evan Goldberg, your CTO. Very few founders and professional executives who come in later co-exist as long as the two of you have.

Evan is one of the smartest people I know and could run sales or services or anything he chooses to tackle, but he loves and is focused on development. I came in wanting a solid development team in place. So our skillsets and interests are very complimentary. Quite often the founder and the professional executive don’t delineate their roles well enough, but with Evan and me, our roles were clearly articulated. And we both believe in what NetSuite does to help our customers fulfill their business visions.

Tell us about folks who inspire you

Larry Ellison is one for showing me how your vocation can also become your avocation. I was at Oracle when he turned billionaire, and I asked myself if I was that rich, would I not retire? After working at NetSuite, I figured out why he is still at it. I couldn’t imagine anything more enjoyable to do with my time. I have the best job in the world.

Well, I believed the last statement till I saw Brad Pitt play Billy Beane in Moneyball, and I figured out HE probably has the best job in the world! I am honored to have Billy’s guidance as a director and customer. As the movie shows, he saw the game of baseball from completely different eyes. On our board he brings the consumer mindset to the enterprise world. He forces us to think differently, as he did the baseball world.