Driving Business Growth Through People-Centric Strategies and Successful Partnerships

With Aaron AU, the co-founded SuccessFactors: a global leader in cloud-based HR software.

Aaron also served as the president of SAP Gem Collaboration Division, boasting over 50 million subscribers. He is a true pioneer in the software as a service (SaaS) revolution, and his journey offers invaluable insights for anyone interested in the world of tech startups and SaaS.

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About Aaron Au

(00:00-01:54)

AS: Welcome to the Experience-Focused Leaders podcast! I am delighted to introduce you to Aaron Au, one of the unsung heroes of the software as a service revolution. Back in 2001, Aaron built SuccessFactors into the global leader in cloud-based HR software and brought the company public in 2007. In 2011 he sold it to SAP for $3.4 billion, which at the time was the highest multiple for SaaS companies at SAP. He continued to thrive and was the president of SAP Jam Collaboration division which had over 50 million subscribers. Aaron, welcome to our podcast.

AA: My pleasure! Very nice to talk to you.

AS: One of the things that I didn't mention in the introduction is that Aaron had a very important and multiple roles in starting RELAYTO and this podcast. Aaron was one of our first anchor investors at RELAYTO and one of the reasons I think he did that is he saw what we were building back when I was an employee at SuccessFactors straight out of Stanford.

Aaron, thank you very much for supporting the vision before it had any reality into it. Thank you very much for showing us and me personally how to build an inspiring organization like SuccessFactors.

The founding story of SuccessFactors

So think about how big the disconnect is. And in the back of my mind, we have no way to be successful. I think my biggest lesson learned there is that we have no clue how to build a car like a cloud company. So as a cloud company, it is not just another software company, frankly. The fundamental DNA and everything need to be different.

(01:54-05:38)

AS: Do you wanna tell us a little bit about the founding story and the genesis of the idea where the cloud as we know it was back then and why it was particularly hard to introduce a new way to do software back in 2001?

AA: Yeah, sure. So it sounds like there's ancient history, right? It is. I'm more of a computer science background. When I graduated, it was like the heyday for most of the graduates — the first wave of internet startups at that time. Of course, subsequently, in about 2000 that is the dot-com burst. My interest area has always been not only in the technology in the SaaS cloud computing area, but more importantly, I'm trying to see how we can apply it to the enterprise. I mean, I'm the kind of person who is really trying to apply technology to solving problems, not just for technology's sake.

Because of that, it took me a couple of years to really try to learn how to create enterprise software because, at that time, we would talk about pre-2000 and the giants in the industry. And most of them are not cloud models for most of the audience that may or may not understand history.

So cloud is not really mainstream. We are kind of fighting an uphill battle to a certain degree.

My first day of startup was a complete failure, and I learned a lesson in this. I don't know if it's the hard or easy way, but it's in such a way that it's kind of eye-opening for me. I say that because what I learned from there is at the tail end of the company, that the company is already not doing well. So I'm running all the R and D, but then, of course, my responsibility is not so much on the go-to-market. And I'm frankly very new to the industry as well.

So, I'm trying to ask the sales team, “How do we actually prospect? How do we sell to the customers?” They showed me. So that's what they did. And this is what the datasheet looks like. And this is how they pitch to the customers. Then I realized there was such a big disconnect. Why? Because there's a picture of the product within the datasheet.

And that picture was taken about nine months ago. I'm on the R and D side, driving a release process every two weeks. So every two weeks is probably the industry norm right now. But at that time, don't forget the industry standard, the standard released by SAP two years ago. Exactly two years. So two years, of course, nine months from our team's point of view is really fantastic because we actually double the industry standard, more than that. But still, I'm driving a release every two weeks.

So I also stumbled because of that lesson learned. My co-founder for SuccessFactors was actually hired by the board at that time for SuccessFactors to shut down the company. So the success sector is not a high fly startup. It was not a success at all. It actually burned for a couple of reasons.

The challenges of running a cloud-based software company

So we see people as a factor that really impacts the strategic growth of the business. That you really need to have a strategic alignment there. That's one of the reasons we put full steam forward and started a company in a very tough time.

(05:38-08:40)

AA: So they are selling on-purpose software number one. But that's probably not the reason for failure, and what they haven't really realized, I think of doing not only cloud software in general but specific for HL you deployed to everybody's desktop. So one of the things that experience factors come into play very much is that I still remember the early days of SuccessFactors because a lot of their users use our software, they don't even know how to turn on a computer. They may not even have a computer.

It's not like today. They don't have smartphones, they don't have any kind of computer device. They are typically like a field worker in warehouse manufacturing, but they don't utilize computers in normal work. But they need to utilize SuccessFactors to finish their HR processing performance reviews and all the things that seem like a norm today. Today it's much easier. I mean, most of the people have a smartphone, but we are talking about 20 to 30 years ago.

So the experience factor comes into play big time on how this will impact the enterprise and the adoption of the software and how you're gonna get value from it. I mean, that's probably the failure factor for the previous success factor. Secondly, I don't think they have focused on the initiative, which is like a child, is not just about a child, it's about the people in the business.

I think it's one of the things that we also like to evangelize and how we are going to get the business value out of the people's business, not the traditional HR software. Because when we actually try to restart that business, we try to pitch every single thing we can find.

But unfortunately, none of them want to invest in us, and most of them sometimes even laugh at us for two reasons. One is in the cloud at that time, which is not mature. After the dot-com burst, nobody wanted to invest in the cloud business model, and finally, they didn't believe that HL was the future of software.

I mean, it's not funny how this can come around today, probably in Silicon Valley or even globally majority of deals are related to cloud and future work, or people work.

AS: So the VCs are not necessarily always on top of it.

AA: Yeah, so it comes full circle, I think. But anyway, that's kind of like one of the biggest lessons learned, and how we probably think at that time, what we still believe that this is the future, this is something very critical, not just for us as I think this for the industry.

Elevating HR with the power of software

Our success as a company depends on the talent that we bring in, cultivate, retain and how that talent delivers on the key strategic initiatives of the business.

(08:40-11:03)

AS: Well, I think the easiest way for those of you who are not as familiar with SuccessFactors is to think of what Salesforce did was a cloud model for sales and CRM you did for HR, but more importantly, for elevating HR right into what you're saying are people performance, organizational performance and really saying that, our success as a company depends on the talent that we bring in, cultivate, retain and how that talent delivers on the key strategic initiatives of the business. And you build the product sweep around that, which at the time didn't really exist.

AA: No, it didn't. That's really interesting to gather around different kinds of initiatives from learning development, but they are all individuals. So I think you're right. That's one of the things that, strategically, we're trying to create across the market.

And that, I think, is the public credit to laws. So he realized that in every board meeting, the CEO or the head of HR is not even in the meeting when they talk about business strategy, but it's such a big piece missing. That's actually one of the things that, from day one, we have been very focused on.

How can we get them as roles into the board and then make sure that they are the ones? And not only that, because people's business is not just about the traditional coy child payroll benefits, it's about a bunch of other things that we tie to the full cycle of the employee experience.

So ranging from how we attract them, how to develop them, and how to perform, we will set up goals and all those kinds of things. A lot of those kinds of processes exist but don't really have software to connect them together. I think they have individual point solutions at that time in the market.

So we are the first one that really holistically creates the big picture of how those things are related to each other. I think that's one of the things that we did as well.

How collaboration efforts made the magic of SuccessFactors work

We all need to figure out what the answer is and learn on the fly. I think that it's not so much about the “Oh, I know the answer, just follow me” kind of thing. It's from sales, marketing, product engineering, and everything in between that we need to learn on the fly. By doing that, we always have the respect of each other.

(11:03-14:43)

AS: I think what you've done then is you basically created multiple categories because the categories change over time. And then you helped create a category of software as a service or cloud at the time it wasn't even called that, right? It was in demand, and there are multiple brands and evolutions of that.

You are Berkeley educated in computer sciences, but you were born and raised in Hong Kong. You know, Lars is from Stanford, the graduate school of Business degree, but he came from Denmark and definitely stands at a different height and engagement than a typical, I would say, American style.

Tell us a little bit about how you made the magic work. How does the fact that you're both outsiders but, you know, had some insiders balance each other out, I guess, or make the magic of SuccessFactors work?

AA: I think that's actually one of the things that we all talk about, at least in the HR industry, to talk about diversity. And I think like what you described, I mean, me and Lars is so fundamentally different both like where we were brought up to education, to culture.

So everything in between, right? Probably one of the reasons is because of that diverse background. But I think that we have some core values that we see very eye to eye, how to have respect for each other. And fundamentally, even though we have different backgrounds, it's not about our past as we are trying to create.

They're saying, “How can we respect each other's domain?” But at the same time, how can we also learn from each challenge? You've probably seen some of the meetings that last came to China product teams and some of the things in the US. “I would do the same when we go to market and how are we gonna pitch, how are we going to bring customers on board” and things like that.

Not that I'm more experienced than some of the sales leaders or the customer leader that we brought on board. I think that's the fundamental DNA of those who have experienced the SuccessFactors culture.

To me, that's one of the reasons that we can really grow as a company. As for the team, we are a small part of it when we grow to a certain scale, then we are just like one or two individuals. But I think more as a company, we have that kind of learning agility. I think that's actually very important.

The importance of learning agility

(14:43-15:42)

AS: Yeah, agility is a great word. I still remember when I just joined and had some ideas of how we could do things better, like Stanford MBA stuff. I approached you, and what I remember is that you actually were very welcoming and responsive, quickly responding to the ideas.

And I've noticed that sort of permeated through the culture. I think one of the action words was “agility,” which I think you did. I really admire the energy that's created. But another one, broadly, there was something about the culture and the experience of being at SuccessFactors at the time that I think a lot of alums that I've interacted with still cherish the environment that you've created.

Tips for creating a productive culture for a team

We always try to create a culture in which people are not afraid of failing. You can fail, but as long as you learn something and try to see how you can be better next time, I think that's what we really encourage everybody and that's also part of the core of the DNA.

(15:42-19:23)

And so one of the things that I think about it, in running my own effort in being a small part of that bigger effort, is how do we create both a mission around which people can get excited about, which is very fortunately easy for us, but also the type of organization, dynamism, and energy.

That people do their best work and cherish the time when they were challenged and given this opportunity, any tips that you have in terms of how you've, over quite a few years, created that culture and the type of experience for the team that has managed to last beyond being absorbed into SAP and remaining in the SAP as a big division.

But still, people have these memories of working together under your leadership.

AA: Yeah. I think a couple of things that we did are different. To me, it's always been a different trajectory of growth when the company expands, and frankly, you do need different kinds of people and talent. Not that the kind of people that you hire is this bad talent. It's just like they are at a certain stage that they are very focused on what they're doing. But up to a certain scale, they need some different kind of style.

They have their own personal growth agenda. So that's not necessarily a bad thing, right? Certain people looking for titles, and certain people looking for a certain kind of experience. So, I think it's just how you can fit some of those into the company while the company is scoring more than 100% per year.

I think that's the not easy part. I'll put it this way, and the reason for that is not only do you need to spot the tank and stretch them out, but at the same time, the company is growing more than 100%. So how do you get to advance it? That's like the balancing act to say how can we still balance the growth of the company.

You can't just have the individual agenda but forget about the company agenda, which is like, "We're still trying to drive growth at the best we can."

We still want to create some room for individuals. I think the most rewarding part for most of them, at least what I heard from some of the people who gave me feedback, is that they really have experience and learn how at what stage to perform.

So wherever that carries them into the next experience or future career, that's really some things that can help them. They can lean on because they've really done something good or bad because sometimes the initiative could be a failure, right? We all make mistakes. I think that's one of the other things that you remember.

Achieving the best experience with the help of feedback

It's not that most of the time, they measure company success based on sales and revenue. We actually look at it differently because, in a fundamental model, we need to have recurring revenue. In order to be recurring, you need to have a high utilization rate, you really need to be sticky.

(19:23-28:00)

AS: Well, I certainly can vouch for that. I had a very unglamorous career as a field enterprise sales executive for a short period of time during the 2008 recession, and it was painful. I certainly have a lot of empathy for anybody who's doing in the market and the new market. But I think it's sort of indicative of the company and the culture that you build that you give people learning experiences and then set them up in a role where they can over time be successful.

I think to some degree, that's the mission of SuccessFactors product, right? It's really fundamental, and the kind of human component of it, there's also an organizational component. We'll come back to that in a little bit. But let's talk about how you create the types of experiences that help people achieve their full potential through maybe better feedback.

One of the early starting points was a content library that we built out that helped people write better reviews. That was sort of the hook that the initial pain point for many users was that they had to write a lot of reviews. They weren't necessarily Shakespeare of the review process and were struggling to get useful feedback for people to develop, and then you did something that was fascinating, married software with some content.

Tell us a little bit about that.

AA: Yeah, the coaching advisor and writing assistant, it's still the most popular feature in the performance review. I think that's also part of the learning as well. I mean, the software is fantastic. But I think a lot of our users are not your typical white-collar utilized computer type of user on a day-in-day-out basis.

I think it taught us a different kind of lesson in order to really get the full utilization. So I think one of the other things is because from the get-go, we look at the whole success, but based on utilization adoption rates, and all those kinds of things are very important.

So we spent quite a lot of effort both on experience and how to make it easy to use. But more importantly, how to make it sticky. One of the interesting parts of the learning is the stickiness that really correlates to a lot of the content.

I think the majority of the people would hate that process. It's once a year and not really an enjoyable process for most companies, regardless of what software they use.

AS: Let me just throw an anecdote here. Because I tell you, I know exactly the moment when I thought, “Hey, this is a real pain there.” And then, there was a moment when I decided to join. I'm in the conference room, I'm interviewed by Lars Dalgaard, and maybe Rob Bernstein, who became the CEO, was my direct manager. So they would go through these conversations, and I see there are these value statements, and one of them, number 9 or 10 was, “You can have an asshole, just don't be one.”

And so I was like, “Okay, these guys have a sense of humor.” That was when I knew I wanted to be part of the team for cultural reasons. But I have a distinct memory of my mother, who, God bless her, came in from Soviet Ukraine as a refugee who had first very tough jobs, but then managed to get a job in her field as a software developer and went on to be GM in great companies. But I have a memory of me, a high school student helping her write performance reviews where she is an amazing manager and leader. People loved working with her, but she could not write those reviews even if her life depended on it. She agonized over them.

So, I basically became, you know, the cheap version of the success action, writing grammar check or whatever it was. It was slightly better English. I obviously didn't speak English very well. The pain involved felt just really profound. So congratulations on finding that.

AA: That's exactly right. So you talk about how to marry content. I mean, that's like putting on the lesson learned that I think the software industry as a whole also evolved from just purely producing software, right? When you're trying to drive utilization, you need some other things.

Of course, today, the part of the hot topic is AI. But to me, the goal is still remaining the same. So how are they gonna drive the utilization rate up? I think it's a little bit similar. If you still remember, I did that maybe 30 years ago. It's almost like the gaming industry. So for most of the gaming industry, they measure based on screen times from day one.

The gaming industry has always probably been a little bit more advanced than enterprise software from that standpoint to how they're going to measure the true success of the utilizations and adoptions. Because when nobody opens up the game, even if I can sell the game to you, that means the game is a game.

So that would not be a success, right? I think the enterprise software sector has learned, and they need to be better.

Frankly, I will argue that today most enterprise employees have more tools. They need it, they just don't know how to use some of them.

AS: They are more about workflow, and it has its benefits. People want to be creators, so you want to write a good review, right? What manager doesn't want to write a thoughtful, helpful review? If you're a decent man, you want to do that, but you lack the knowledge or the skills of maybe how to be a creator in that context. So you're providing help that enables them to be a creator.

They have a great exam experience as a creator because they are using either algorithms or AI. And then, on the reverse side, there is a recipient of that creation, right? Which has long been ignored. They could be the CMO or the COO. So these recipients, are they getting good experience? Are they getting the advice that makes you discouraged and disheartened, or is it very shallow?

You know, you're just a Barbie here. Be awesome. That doesn't really help people grow and develop either, right?

How to find a balance between creators' and consumers' experience

(28:00-30:20)

AS: So how do you effectively find the balance between creating a great experience for creators and consumers?

AA: I think we're still learning about it. I think it is based on business goals. That's actually one of the reasons that when you had the idea to start RELAYTO, I jumped on it to help where I can.

I think that's one of the things that is still, to a certain degree, not the norm in the industry. How can you balance between the creator and certain knowledge? Creating a great presentation of a microsite is probably one of the good examples of that too, right?

So yes, many truths out there.

AS: So historically, I think people focused a lot more on simple creation, like PowerPoint. People create ugly PowerPoints and little sticky figures, bubble-type things, right? Then the second wave was really about collaboration.

We'll come back to that because you built a product with a huge number of subscribers on that. And I think we were the third wave. One of the folks said that in the age of information overload, for the creators and collaborators to be successful, they need to start at the end, start with the recipient, and then work backward.

And all of the innovation in creation and collaboration is fantastic. But if you don't start with the recipient, you are gonna be lost in the noise of the digital overwhelm and probably lose out to some of the consumer apps that add zero value to humanity. But actually, I'm really good at sucking up people's time and attention towards things that, maybe, make them self-conscious and not focused on things that add value to their lives.

The evolution from creation to collaboration with SAP Jam

Learning is actually a collaboration by nature. You actually learn from each other, you typically don't learn on your own. Even though there are many e-learning platforms and a lot of e-learning content, the majority of learning is actually peer-to-peer learning. I learned a lot from you. You may learn something from me. That's probably the most effective way that I show you how to do certain things or collaborate.

(30:20-32:32)

AS: But they're good at behavioral optimizations. This is the challenge. So tell us a little bit about the evolution from creation to collaboration that you've led with Jam and how you rolled out the hidden, but the large, probably the largest of the time subscriber base of actual collaboration product. Tell us more.

AA: Yeah. I think we pretty much borrowed the same DNA where I inherited the SAP Jam unit within SAP. I think in the enterprise space, certain processes or tasks are collaboration by nature, and certain things are not. And what I mean by that is that learning is actually a collaboration by nature. You actually learn from each other, you typically don't learn on your own. Even though there are many e-learning platforms and a lot of e-learning content, the majority of learning is actually peer-to-peer learning. I learned a lot from you. You may learn something from me. That's probably the most effective way that I show you how to do certain things or collaborate.

So this is a collaboration-by-nature kind of problem. You just need somebody's fast approval. We have many different companies that proposed Facebook for the enterprise ideology. But to a certain degree, they mix with a lot of the noise, all mixing together and trying just to put one platform, go and ask the employee or end user to say like, “Have fun.” So that is not a success.

Different approaches for successful software utilization

(32:32-37:06)

AS: Let's pause on that. So there's a pretty famous entrepreneur CEO of a product called Yammer. He's now a venture capitalist, David Sacks. They've done some very interesting things with Yammer in terms of the global market. But I think he would probably agree that they didn't figure out the usage in the enterprise that would be highly valued.

It was bought by Microsoft for about a billion. It ultimately didn't last, and now there are other solutions. What kind of your Jam came out in that universe in that era originally, but you built it into something else at SAP? And so maybe we could compare and contrast to that.

AA: So we pick a little bit of a different kind of path that we focus on and follow the storyline that I laid out. We believe that is the collaboration by nature problem that really goes deep into that solution.

When we launch, we are not launching another collaboration platform. The first thing we launch is called social learning. We focus on how you can apply collaboration to solving a learning problem and complement the traditional e-learning platform or your online courses.

But how do you learn from each other? How do you create and curate the content within your peer? How to follow the subject matter expert but not a certain topic?

So we are trying to leverage the platform to really expose the experts, the content, the different areas that really drive, and suddenly you see not only our user-basing platform increase but also the utilization at the same time. That's what we would like to see. We are trying to drive more utilization because a collaboration platform similar to everything else is like if you don't have the utilization, that platform will die.

It doesn't matter whether it comes from SAP, Microsoft, or Google. You need the utilization you know to survive within the enterprise environment. We are actually focused on that high-value, high-velocity task that really differentiates us from the general platform. Because we are not trying to compete with Microsoft.

Okay, I use Jam for my PF to PA learning. I want to see how it is today. I want to see what Alex is doing today. Then I will leverage the Jam as a platform. I talked to many CEOs. The biggest problem is they're not lacking a platform. They actually have too many platforms. If they utilize Salesforce, they have the Salesforce platform. They are probably Microsoft users. If they are IBM to a certain degree, they may have the IBM PLA. There are many things for the employee.

AS: This is very confusing because you need to find the niche for the employee to think about that goes well with these tools.

AA: Exactly. So that's one of our lessons learned. That's why we focus on how we can do social onboarding. This is one of the things that still from my root in SuccessFactors relates to people. How do we help employees to get value. That is another thing that we utilize. Then the high-level goal remains the same. How can we differentiate ourselves? We highlight the Red Sea of the different collaboration platforms out there. How can we make the employee stand out?

The challenges of the category creation process

You need to understand the problem way better than most of the clients or even your competitors in order to figure out the formula. Can I differentiate based purely on my execution, pricing, or distribution, or do I need to have a combination of that?

(37:06-41:25)

AS: You continued to do category building. It sounds like from the three IPO days and SuccesFactors through the IPO, there was a shift from performance management to performance and goal management to performance and talent management.

So it's really interesting that you brought that up generally. How do you see this process working for category creation? Because I think one of the challenges is if you don't have enough market momentum yet. It's pretty tough to create a category and or redefine it, at least, but you do need to differentiate and stand out from day one, almost as an entity. And frankly, I think a lot of companies are struggling.

I was debating how we do this because, in some cases, the category exists. For us, we noticed flipbooks, these things existed. I never wanted to build a flipbook solution on RELAYTO. But people are looking for flipbooks, let's show them the future of the flipbook. So we embraced that as one of the categories that already existed. But we wanted to transform, and you've done this multiple times successfully. So what is the secret behind that transition?

AA: I'm not sure that's a secret. I think there's a fine line between. I can probably answer a little bit differently. So when you look at it in reverse, it's like, how to define success, right? How can you make your solution stand out? First of all, you hope whatever you're doing has some competitors. But when you have competitors, how do you stand out above all of them? How do you make the whole category certain, whether it's an existing, brand new, or rebrand category that is vibrant and that people pay attention to?

Because it's not just about you. If this particular idea or solution is about the journey to trying to make some industry transformation to a certain degree, you need to have a core value that is aligned with the buying center budget.

But with different positioning and solving a combined different problem, how are you going to make the problem statement even bigger? Those are the things that can only help you and the industry to really redefine what it is.

Another thing that you probably cannot control is the timing. You might have a fantastic idea, but the timing is not right or just based on whatever the macroeconomy could be, economy downturn, uptake, whatever that might be that impacts whether certain categories become a focused area or not fool the customers. Because the customer may spend money on certain things. Really depends on the time and date over the years. And today, when there's a lot of geopolitical uncertainty, you're probably less concerned about the geographic expansion, but you still need to have distributor workers and all those kinds of things.

The idea is good or bad. It can still be a good idea, but maybe five years from now, it's just a little bit too late already. So, I think all those kinds of things that cause why startup is still not a slam down is typically a hit and miss.

How to focus on people in an economically uncertain environment

The problem for startups is you typically have some more roles. But by nature, a startup is doing something nobody has done, right? You need to create a role, or you need to have an employee to continue to try.

(41:25-44:16)

AS: You got to get the timing right, amongst other things, and you brought up economic uncertainty. So I wanna double-click on that. As we wrap up this phase of the conversation, we continue with the RELAYTO team.

But one of the questions that everybody is wondering is whether folks in Europe may have some more economic pressure. Folks in the US are worried about that. Asia is growing like always. But there are parts that grow more and the parts that don't grow. So how do you do in an economically uncertain environment? How do you focus on people, it's always like the war for talent. That story is great when you can't hire enough people fast enough, and we're in the technology world going through that cycle.

But I think there are still some pockets where it's really hard to find and attract great people. The environment is changing, and people are no longer negotiating over their pet bereavement leave. They have slightly more realistic expectations about what a workplace is for.

How do you help organizations navigate, given the market realities? In some roles, it's hard to hire people still. It's frankly a more competitive, more demanding environment than it may have been a few years ago.

AA: Yeah, I think the uncertain economy and climate also create a shift a little bit on the supply and demand curve from a people perspective. And what I mean by that is probably people will be a little bit more risk averse than trying to go back to the norm.

It's not like I can just hire somebody from the street to do something already unless you're doing some commodity thing. By nature, you're looking for people trying to fail fast and innovate. But when you have an economy and uncertainty, then people are risk averse, and you have fewer people willing to try. That creates more problems for startups.

How to employ the right people for an enterprise company

You need to have the personality, the team that has that drive to try to create some nature and push the envelope in terms of how they're gonna create more value in some things that the customer has not seen or experienced.

(44:16-47:24)

AS: You're one of the unique startup founders who ended up leading a major division at SAP, and also went from a technology CTO founder to a general manager president type of role. Let's talk about larger organizations that do have distributed workforces. How do you get them focused on sailing through these turbulent waters effectively?

AA: I think for the big company, the problem is bigger. The reason is it's a public company, right? So they have the responsibility to drive more profit margin to a certain degree, and then they align it most of the time to people. It's about their location strategy, right? SAP has over 20 different development locations and a huge development team involved.

When you're trying to open a head count, you can be put into many different locations. It's way more complex. Trying to balance out your cost and how you can do it, make sure you're driving margin that way. But that's also become a little bit more problematic because it is not so obvious. It's like I only hire in a low-cost location, for example. I think in order to really create critical mass and drive by nature, it doesn't matter if it is SAP or a startup, you still create an innovative world. Innovative means you create something that doesn't exist in the market.

So by then, you're not just looking at a spreadsheet or what's the low-cost location. You need to create a culture where it doesn't matter how many locations you have. We win as a team, we lose as a team.

It doesn't really matter whether it's Jam or SuccessFactors. When a customer says, “I'm not renewing your solution”, it's not because of just Aaron or Alex. It could be everybody else. I think it's one of the things that we need to balance. A big organization may sometimes even have more pressure than a small team, and sometimes startups, by default, have that constraint.

Generational change in the culture of accountability

When you're trying to drive the accountability culture, at the same time, you also need to take into consideration the generation gap because the different generations are motivated by very different things.

(47:24-51:14)

AS: Sometimes choosing to have more choices is not such a good thing for you. But one of the themes that I hear, and I think this is something you brought up at the very beginning, is accountability. What SuccessFactors software enabled was accountability. This is what actually happened. Some of the KPIs could be out of your control, and some of them are your own development goals that you've set for yourself or your manager.

So this is really profound, right? I think there are some things in our nature that make us workers, and there's also a parallel thing that we kind of default to laziness. I think the social environment, such as work, creates the opportunity for individuals to support a cause that they hopefully care about. Do their own best in parallel with colleagues. This is one of the joys of building a company.

I think you've built software that actually helps bring that sense of accountability to individuals and to teams. What have you seen change from people being more deliberate about how they set goals and how they measure themselves over time? Have you seen an evolution in the market in that, even in terms of the early days of SuccessFactors?

AA: Well, I think this is very much tied to a different generation thing. The thinking and working styles are fundamentally different.

My son is 17 years old, and he is motivated very differently than when I was 17. That's one of the things that I think of.

AS: This is a perfect side. I have not personally worked with your son, but I think one of the best gifts that you've done for us is you've introduced your niece Ashley. During her gap year at Yale, she helped us out during COVID. She took a year off in the support of RELAYTO.

We still have a legendary story about our family productivity. She paced that for the entire team as an unpaid intern. And it was just tremendous. I think that's why I really want to ask you a question. Your son, at 17, just completed an internship outside of the country as well. I mean, a lot of people want to know how to motivate kids.

How to motivate different generations

(51:14-52:09)

AA: I want to know too. I think it's less about me. They got motivated by different things. The lesson learned for me is I can't put myself in their shoes because I'm motivated by XYZ, then they must be motivated. But I say they typically don't, and I think we need to learn what I'm trying to do for the next generation, not just my son. I have a company that has interns, we try to create an environment that they can explore. I think different generations, the common theme is they all want to explore differently.

AS: That's a beautiful thought. We want to build a generation of explorers.

AA: Yeah, absolutely.

Parting words

(52:09-52:29)

AS: Thank you so much for joining us. Lovely to reconnect with you. Thank you for your support, starting the SaaS world as we know it, and helping bring in generations of startups.

AA: Thank you.

AS: Bye-bye.

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