I read a fairytale last Friday in CNN Money. It was about all the big bad wolves that killed Siebel. A fairytale disguised as a true story and a moral tale. The only piece of reality in the fairytale was that the big bad wolf was not Salesforce.com. That bit is correct. It is a myth. I spent a decade with Salesforce.com (regularly taking business off Siebel in the early years), but Benioff and Co. did not kill Siebel.
According to an ex-Siebel executive the real reasons Siebel suffered a rapid demise were global recession and the fact that they were too big to change their business model or innovate. Oh…and Siebel’s “turnaround plans were interrupted” by Larry Ellison acquiring them.
The implications in this fairytale are:
1. External factors were responsible for Siebel shrinking dramatically from a 30B USD Market Cap behemoth to 20% of that value in a few years.
2. Ellison failed ultimately, because Siebel’s executives were just about to turn their own fortunes around before Larry opened his wallet at their table. Oh dear.
So why did this Goliath meet David so soon?
With 2B USD revenue, a large war chest and a completely dominant market position, Siebel rapidly morphed into the incredible shrinking man. Siebel needed to learn from its biggest adversary, take some painful medicine and cannibalise some of its own business by moving to the cloud and pouring finances into developing a great cloud based CRM app. They could have created one so great that it would have formed the basis of a global platform. They didn’t. Salesforce did.
Siebel failed to change before they were left behind.
They had all the resources to innovate smartly but instead they became the proverbial ostrich in the sand. In stark contrast Salesforce’s leadership was incredibly strategic. They listened to the winds of change and continuously evolved. Salesforce.com remains highly innovative today even though it has double the revenue and a similar Market Cap to Siebel in its heyday. Siebel made hay at the beginning when there was a great idea and no alternatives in the market.
So who killed Siebel?
Salesforce? No. Global Recession? No. Being too large to innovate? No. Larry Ellison? No. Darth Vader? Yeah, maybe. The big bad wolf was in the mirror and it blew its own house down. Forget mystery or myth. All organisations will create and meet their inner Davids eventually. The not so great ones create David with vulgar haste. Siebel killed Siebel.
“For me, it is far better to grasp the Universe as it really is than to persist in delusion, however satisfying and reassuring.”
Photography+Text © Stephen Cummins
In the interest of context and fairness, this article was written in response to this piece from a former Siebel executive:
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