Entries tagged with “IDC”.

For the 3rd time this month, Mark Leslie was mentioned in a conversation or presentation. The most recent was at TiE Boston’s Annual VC Outlook Dinner. Actually, mentioned, is way too soft. He was cited, praised, quoted, and otherwise venerated. Mark has a remarkable story. He took VERITAS from 12 employees and $95,000 in annual revenue to over 6,000 employees and $1.5B in revenue, before the company merged with Symantec on July 5, 2005.

I first met Mark, when I hosted IDC’s StorageVision conference in San Jose in May 2000, a year in which we recruited Steve Luczo, then CEO, and now Chairman of Seagate, and Joe Tucci, then the newly appointed President and COO  of EMC.  Mark wasn’t the best dressed (that was Joe) or most poised (that was Steve), but he gave, by far, the best talk. The talk that was discussed three times this month wasn’t, however, his StorageVision speech. That honor goes to this talk: “It Always Takes Longer and Costs More.” On Page 15 of the presentation, Mark begins a discussion of the Sales Learn Curve (SLC), which is the sales equivalent of the Manufacturing Learning Curve (MLC). The SLC is critical, Mark argues, to knowing when to step on the gas with sales.

Almost every company I’ve talked to measures the cost of sales. But where organizations differ is in the costs that are included in the cost of sales. Mark includes:

  • Marketing
  • Product management
  • Product marketing
  • Product  support
  • Sales engineering
  • Sales

Some of these costs are more fixed than variable. Marketing, product management and product marketing don’t need to grow linearly with sales. Support, sales engineering, and sales costs are, however, more directly proportional to revenue.

Since more sales means that the fixed costs in the cost of sales calculation decline as a percent of sales, many startups are tempted to hit the gas early on deploying sales and sales engineering resources. But until they have gone through the iterative process of perfecting the sales process, this approach just burns cash.  Instead, he stresses the importance of  investing for learning in the early stages, making iterative improvements in the sales process. When the sales process is perfected, then, and only then, should a company put the “Pedal to the Metal,” making significant investments in sales and sales engineering.

One of the things we used to discuss, when I was running the storage research practice at IDC, was “When will a market disappear and just become a feature of some larger market?”  Examples are numerous.  Remember when there was a market for browser software? And, while NetApp is going strong, both Microsoft and Sun Microsystems are trying to make NAS a feature of the operating system.

One of the reasons I joined the board of StorMagic was that I saw the potential for the company to be a market disruptor.  Today, StorMagic announced SvSAN software, which, when installed on a VMware ESX server, converts the internal storage of the ESX server into an iSCSI SAN.  VMware leverages the fact that most single applications don’t need all the computing power of today’s servers.  SvSAN leverages that same fact to provide the storage management function within the ESX server, and also takes advantage of the fact that the internal storage capacity of an ESX server, perhaps the least expensive storage you will ever purchase, is more than enough capacity for a large number of VMware ESX server-hosted applications.  (more…)