King of the cloud: Fergus Gloster on winning the SaaS revolution

14 Sep 2016

Fergus Gloster, founding director of Salesforce and Marketo in Ireland

Ruthless execution, selling and renewing are the sinews of the cloud software business world according to Fergus Gloster, the man who masterminded the scale-up of cloud giants Salesforce and Marketo in Ireland.

Before anyone was shouting ‘software will eat the world’ they were writing the obituary of the tech industry.

On an uncharacteristically sunny day in January 2001, I took a taxi out to what were then the offices of Salesforce. Located on the top floor of Powerscourt House in Enniskerry (now home to the swanky Ritz-Carlton Hotel), a small start-up team consisting of Fergus Gloster, John Appleby and Dave Dempsey told me how on-demand computing was going to be the future of software.

‘Not only was the vision of Marc’s really sound, but the execution by was tremendous. You can have a great idea, a great product and all of that but if you don’t have a great execution plan you may not win’

Writing for a business magazine at the time, the pristine gardens of Powerscourt and the tranquil winter landscape were at odds with the turmoil affecting the tech world at the time.

It was a time when the first wave of start-ups had succumbed to the dot-com bubble bursting in March 2000. It was a time of carnage. It was not fashionable to talk about start-ups. But when everyone was running away from technology and starting up, Gloster, Appleby and Dempsey had left senior jobs at Oracle and were steering a ship directly into the stormy headwinds.

Not many people knew it at the time, but Gloster and his colleagues were spearheading the revolution we now know as cloud, or, at least, the software-as-a-service (SaaS) segment of that market.

Salesforce was the dreamchild of prominent Silicon Valley executive Marc Benioff, who began championing this exotic idea that instead of owning software people would rent access to his CRM platform.

The youngest person to ever hold the title of vice-president at Oracle, after 13 years Benioff had an epiphany and started in a rented San Francisco apartment and loudly proclaimed the end of software as we know it.

For Gloster and co, an article in a business magazine at the time alerted them to what Benioff was doing. Fans of the concept of ‘the network is the computer’, Appleby wrote an email to Benioff suggesting he locate an office in Dublin.

16 years later, and with over 700 people now working at Salesforce, Gloster refers to that email as “the best example of how to write an outbound email”.

Return of the native

Gloster, a Limerick native, will be in his home county to speak at Startup Grind, sponsored by Bank of Ireland, on Thursday 15 September.

He will also be in Dublin next week (21 and 22 September) to address the SaaStock conference, the biggest gathering of B2B SaaS executives outside of Silicon Valley this year.

As well as spearheading the growth of Salesforce in Dublin to reach 700 people, Gloster repeated this feat by facilitating the growth of another SaaS-based cloud company in the city, Marketo.

He now spends his time advising companies and holding non-exec roles, and his favourite outlet is teaching maths to kids in west Dublin as part of the CityWise educational charity.

“We were interested in network computing, or cloud as it is known today, and we had built our own prototype network computers,” Gloster recalled.

“After John wrote to Marc, Salesforce got in touch. They liked us and persuaded us to leave our cosy jobs at Oracle and work with them instead. It was a tiny company at the time with less than 100 people.”

While the tech world continued to implode, Salesforce took on the impossible and won by appealing to a changing business landscape where tech investment became the domain of working capital rather than capital investment. It is now a $7bn-a-year tech juggernaut that Gloster simply describes as “outrageously successful”.

In 2009, Gloster left Salesforce and it wasn’t long before Marketo came knocking on his door to help them establish a beachhead in Europe.

“I turned them down for a while but they kept knocking. It was when the recession was in full swing, Ireland needed the jobs and there was something about wearing the green jersey that encouraged me to get back into the start-up/scale-up fray and help Marketo set up its international business.

“I said I would give it four years and I did,” he said.

“Start-ups and scale-ups are tough and starting up in a new region requires a lot of hard, continuous work. I joined Marketo and helped it set up its international headquarters in Dublin as well as grow in the APAC region.”

How to succeed in SaaS

Gloster left Marketo last year and continues to advise companies in the SaaS space.

“Not only was the vision of Marc’s really sound, but the execution by Salesforce was tremendous. You can have a great idea, a great product and all of that but if you don’t have a great execution plan you may not win. As much as Oracle won the database wars, it didn’t always have the best database product. There were others that had the best CRM products but they ignored what was happening in cloud computing, or on-demand as it was known then, and they lost their market share.

“There are lots of dynamics, but what was interesting about cloud computing is not only did it change the delivery mechanism but it changed the business model of software radically.

“Now, of course, everything is in the cloud and you can’t do anything without being connected to the cloud. But people thought we were mad in 2000.”

Recalling working with Benioff, Gloster describes him as intently focused and poised. “He was very visionary, a superb marketer and could do detail when he had to do detail. He was very good at motivating people and bringing them along, but equally he demanded a lot from people. Anybody who is successful like that has to be creative, ambitious and very driven.

“Equally, there’s a soft side and that’s why I got involved in CityWise to teach kids maths because it came out of the work we did with Salesforce Foundation and it has stuck with me ever since.”

Gloster believes that, thanks to cloud and SaaS specifically, there are ways Irish software companies could emulate Salesforce and Marketo’s success.

“It used to be too hard to get to that level but the cloud makes it easier for companies on the delivery side. Look at the success of Fleetmatics. One of my favourite companies at the moment is Epic Software in Cork, which does cloud software for the nursing home industry.

“When I came out of college, the idea of starting a real software company out of Ireland was too hard because of the distribution model and overheads.

“But now you can pick an infrastructure partner like Amazon Web Services or Microsoft’s Azure and your application can be made available to anyone.

“This is a superb opportunity for an Irish company with a good product.”

However, with the distribution solved, Gloster believes the main inhibitor to Irish software companies is funding.

“While more and more international funds are active in Ireland, we still don’t have the preponderance of capital American companies can access which creates a different dynamic and mindset.”

In lieu of capital, Gloster said the real decider in the SaaS market is who dares sell.

“The key is selling and good business skills. Can you generate leads? The next question is, if you get leads can you qualify them? Then can you demo your product? And if the demo goes well, can you negotiate value in a contract? When you do that, can you deploy and support the customer? And can you do that all over again to get them to renew?

“When you look at those individual processes, it doesn’t matter if you have 10 customers or 2,000 customers, you need to have those processes in place.

“There’s no need to reinvent the wheel. Just look at the best practices of what the best companies in the world do. There are plenty of books on how to sell and market, but it is the rigour to enforce those practices that makes all the difference. And that’s what I’ll be telling the gang in Limerick.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years