What does it really take to build a platform? Guidewire Software CEO Mike Rosenbaum talks with show host Avanish Sahai on the patience and determination required to take your company on the platform journey. Mike shares the first-hand knowledge, and passion, he has developed for platform building throughout his time at both Salesforce and Guidewire - two incredible platforms in their own right.
In this episode, Mike Rosenbaum shares his experience and key learnings on what it really takes to build a powerful platform, drawing on his time leading product management and go-to-market strategy for core CRM products at Salesforce and as EVP of the Salesforce Platform team, to his current role leading Guidewire.
Guest: Mike Rosenbaum
Mike Rosenbaum is CEO of Guidewire Software, where he has overall responsibility for global strategy, organization, culture, and operations. He is passionate about building great teams and innovative products and platforms that deliver value for customers, partners, and shareholders. Prior to Guidewire, Mike led product management and go-to-market strategy for core CRM products at Salesforce and was also EVP of the Salesforce Platform team. He also served in the US Navy as a submarine officer. Mike’s unique leadership and cloud experience give him the capability to accelerate Guidewire’s role in the P&C industry.
Host: Avanish Sahai
Avanish Sahai is a Tidemark Fellow and has served as a Board Member of Hubspot since April 2018. Previously, Avanish served as the vice president, ISV and Apps partner ecosystem of Google from 2019 until 2021. From 2016 to 2019, he served as the global vice president, ISV and Technology alliances at ServiceNow. From 2014 to 2015, he was the senior vice president and chief product officer at Demandbase. Prior to Demandbase, Avanish built and led the Appexchange platform ecosystem team at Salesforce, and was an executive at Oracle and McKinsey & Company, as well as various early-to-mid stage startups in Silicon Valley.
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You can find the full transcript here.
Avanish: Welcome, everybody, to today’s edition of the Platform Journey podcast. And today we have probably one of my favorite people - a great friend and former colleague, Mike Rosenbaum. He’s probably one of the premier experts on platforms and platform strategies anywhere in the world. Mike, welcome.
Mike: Thanks, Avanish. I don’t know about that, but I appreciate the introduction! I appreciate the opportunity to talk to you about this, because it’s certainly something I’m passionate about. Did you want me to introduce myself?
Avanish: Please do. You’ve got a pretty phenomenal background, so please talk a bit about that.
Mike: So, I had the opportunity to work with you, actually, at Salesforce, where I worked for 14 years – from about 2005 up to a few years ago. While I was there, I had an opportunity to work with our app exchange marketplace, the partner ecosystem, and also the platform business unit at Salesforce, through a whole bunch of formative years. I learned quite a lot about platforms and ecosystems and all that. And then, about three years ago I joined Guidewire, where I’m the CEO now. I have had an opportunity to take almost everything that I learned at Salesforce about cloud computing, about cloud systems and platforms, and apply it here at Guidewire and to the insurance industry. Like I said, it’s a passion of mine, platform business models and platforms.
Avanish: I think you and I are in the same sort of mindset there. It’s part of a really new major trend. A lot of companies are thinking about their platform strategy and their ecosystem strategy, and often those two go together. But why don’t we roll time back a little bit, Mike? The audience here is folks who really are thinking about this stuff for the first time. Others may be thinking about this from a new strategy perspective. So let’s roll the clock back a little bit and go back to the 2000s. Talk a bit about how you saw, from your vantage point, the platform strategy for Salesforce? How did that come about? What were some of the decision points? And how did you see that evolving?
Mike: Yeah, sure. I worked at Salesforce before being involved directly in the platform and the app exchange. I would actually think of it as doing some implementations of Salesforce for Salesforce. We were working on a billing system and an order management system that we were going to use at the company, and we decided – very intelligently, in hindsight – to use the Salesforce platform to execute on those projects. And I recognized – I wouldn’t say almost immediately, but pretty quickly – that this was a powerful new tool that we could apply to tons of other use cases.
I certainly wasn’t the only person who recognized this, but the idea that you could take this thing that was very, very good for sales automation and CRM and apply it to other things became clear to me when I was implementing that program. That got me involved with the groups that were trying to create the idea that with Salesforce, you could do almost anything in enterprise software. For any business process that could be advantaged with this application, we could build applications around it, share those applications with other Salesforce customers, and build a whole ecosystem. For me personally, the kernel of that was being involved in this project [and realizing the possibilities]. Now, almost 20 years later, there’s whole companies that are doing this in and around the Salesforce platform.
Avanish: Yeah. Sometimes the personal pain drives some of the most substantial innovations out there. It’s like, why can’t I do this? Or why can’t this be done in a different way, or a better way?
Like you said, it’s been a journey that’s now coming up on 15, 20 years. As you think about that evolution, how do you compare what it is now to when you had that first vision? Do you pinch yourself sometimes, and say, hey, I can’t believe it’s become what it is now?
Mike: Yeah, I suppose I’m surprised… No, not surprised. I am proud of what the team at Salesforce accomplished. I almost said surprised, but it’s not surprising, right? Even back in 2006, 2007, you could say, if we do this, if we chain all of these events together and they all work, then you could have public companies building applications on the Salesforce platform. And they could have thousands of users and millions of dollars in ARR. All those things could come true.
Two words that I would encourage everybody to keep in mind, if you’re thinking about trying to chart this course for your company, are determination and patience. I think those were the things that were very difficult to deal with at Salesforce. These things take time to develop, and they take time to build. You have to be more patient with platform strategies than you have to be with, let’s call it direct application strategies. But you can chain all these steps together; they’re all logical, and they all end up working. Then you’re here, and can look backwards and say it was very clear and obvious that you did that. But it takes a lot of determination and patience to see it through.
Avanish: I love that. In hindsight, it looks perfectly orchestrated, but you’ve got to have a plan. Along the way there’ll be some things you have to fix and change and rethink, but at the end of the day, it is a long game. You’ve got to have the patience and perseverance to drive that across the Board, the executive team, and your peer group. For a lot of people, when they think about Salesforce, it's become a bit of a North Star. A lot of people want to replicate that system and extrapolate from the lessons learned.
You took on the broad role of the Head of Platform; you saw both the ecosystem side and then also the product side. Talk a bit about that and what that experience was like. Tell us about that part of the journey and how you shaped the product in that role.
Mike: It was a super rewarding role that I was very lucky to get, to have the opportunity to play that part in Salesforce and in my career. I would give people the following advice or thoughts about what platform is: I think that you should be very specific about what you mean when you say platform. What is it that we’re trying to do? Are we trying to create APIs that enable people to connect in and out of our application? Are we trying to create mechanisms for customers and partners to configure and customize the application? Are we trying to create a marketplace, or an ecosystem, where these things can be shared? Are we trying to actually facilitate third parties building businesses and business models in and with us? Those things are all just different but related, and I think very often this word “platform” gets used in so many different ways and contexts. That was one of the things that was challenging, but also rewarding, about the job of running the platform in Salesforce.
The other side of it, which I think is critically important to talk about and understand, is who the platform is for. Oftentimes, people are building platforms now for their internal developers. Then they’re extending those same capabilities to their external developers, and their external partners.
Being clear about all of that was very, very helpful for me when I was doing my best to be the GM of the platform at Salesforce. It’s about being clear on where our priorities were and what the deliverables were, and channeling the investment that we were making towards as many of those goals as possible. Being laser focused on one thing is great, because you’ll deliver it, but when you can find things that are going to benefit that whole spectrum of business strategy – those are the things that I think really ended up paying off for Salesforce. We could do things that benefited the applications business, and at the same time benefitted the internal developers and the external developers, and helped us create a business model for partners. Those are the things that really paid off.
Avanish: Love that. So let’s do a quick double-click on that. I know you spent a lot of time with partners, and you spent a lot of time with customers. What are a couple of examples where you look back and say, those were pretty amazing?
Mike: I paid a lot of attention to what was unique about the Salesforce platform, because there’s a lot of technology platforms out there that you can use, right? The choices are incredible these days. If you sit down with a development team to build something, you could probably waste six months just deciding what stack, what approach, choosing between all these options you have. I know they’re not limitless, but they’re pretty extensive now.
So I spent a lot of time trying to think about what made Salesforce unique. And the thing that I think makes Salesforce unique is how configurable the applications ended up being for non-developers. Clicks, not code. No code development. The ability to extend and configure an application in that way is, in my opinion, still very unique to this day. You can sit down with an application that’s built on Salesforce and you can automate business processes and extend the model that underlies that application.
Those things that Salesforce benefited from, when we incorporated them into the platform in such a way that partners could leverage them, were extending into the partner ecosystem. It was critically important to talk with partners about how to do this in such a way that the application they ended up with inherited this benefit, because that was the thing that differentiated them and gave them an advantage in the market they existed in. That was the thing [for Salesforce]: making sure that what makes us unique – what makes the applications that are built on our platform unique – were incorporated into the design and approach that we took with our development and with our partner development.
Avanish: You already started alluding to these, but when you look back, what are some of those key success factors? You talked about the persistence; you talked about the long-term view. As people start thinking about this – as you look at your lessons from Salesforce, and perhaps now at Guidewire – what are some of the things that people need to be proactively thinking about? Where do you see some of those key lessons, in the time that you’ve spent in this?
Mike: I think in terms of key lessons, it is so critically important to build and maintain the trust of the people that are relying on you to build and deliver this platform. It has to continue to work, release after release after release. You have to be extremely careful. And maybe just make a rule that you’ll never break people’s applications. Don’t violate that trust, because it’s so hard to recover it. People, to this day, still talk about how companies like Twitter and Facebook did things for developers, but then changed the rules, and shocked people. And that was years ago, but it’s still seared into everyone’s memory that it happened.
If you aspire to do this, you have to make that commitment to be crystal clear about how things work and how you should expect them to work going forward – and you have to live up to that. That is very, very, very important. That applied to Salesforce. It applies to other cloud platforms. There’s a lot written about this that I think is worth reading. Certainly, we aspire to that approach at Guidewire. The idea that you can trust that what you’re building with our platform will continue to work going forward. We won’t change the rules on you. That was something that Salesforce deeply understood from the beginning.
The other side of it – I’ll get back to it – is just patience and determination. At Salesforce, and I think also at Guidewire, these things take time to develop. You’re always going to be faced with some other goal or objective that you think you can execute on faster. And you’re going to see the investment-to-payoff come in more quickly. There’s going to be people that are saying, let’s just connect these dots and prioritize this [instead]. And you need to do those things too! But there’s a balance in saying you have a broader, bigger picture in mind, that if you give it three to five years can really have an outsized impact on the company. I think that’s important.
Avanish: Completely. Hundred percent agree with that. I think most of our customers and partners there, if we went back and interviewed them, probably would agree with that too. That determination, and that building the trust and respect.
Now, look, we all know these things are never perfect, right? What’s the flip side? What are some of the things that you think of as the challenges or roadblocks that most of us who have been in this kind of role have faced? What are the things that, with the benefit of hindsight, you might have thought about differently?
Mike: Okay, so this may scare everybody, but you will remember this. We used to talk about this all the time. We used to say 50% of these partnerships, 50% of these businesses, are going to fail.
That is the exact opposite of the approach that you want to take with your direct business. When I talk about or think about Guidewire, I am completely committed to 100% of our customers being successful with the implementation of Guidewire. That’s the mindset, the mantra, the attitude of everything in our company. But when you do a platform strategy, you’ve got to realize the success rate is so different. and You don’t actually know this when you start off, and you don’t know this with each individual that you’re talking to, because it’s not just the technology; it’s the business model, and it’s the leadership, and it’s the market, and everything else that factors into that. All of those things can cause failure. And do cause failure! You have to learn to be comfortable with that. Or maybe always a little uncomfortable, but accepting that that’s just the way it is.
It’s almost like a dichotomy. For most cases, I think you have direct and indirect strategies in companies. You’ve got to have this customer success, 100% success, attitude as one part of your mindset. And then on the other side, you’re planting a lot of seeds. Some of them are going to be wildly successful, and some of them are not. You’re going to do everything you can to make them all successful, but they’re just not all going to be wild success stories. Your marketplaces end up with these like 80/20 or even 90/10 breakdowns, where 90% of the value is coming from 10% of the applications. That’s kind of uncomfortable to say aloud, because everybody wants to be successful, but it’s the reality of how these things end up working. Being able to balance that, as a leader of an organization, I think is an important thing to grapple with.
Avanish: For those listening, you can probably sense an analogy to the investment world, right? It’s like a portfolio?
Mike: Oh, for sure.
Avanish: It’s that idea that 10% will do great, probably 40% to 50% will do okay, and the other 50%, as Mike said, probably won’t make it for reasons that may not be fully in their control.
Mike: That’s absolutely right. Though, the difference between investing [and this] is, at least from my experience at Guidewire and at Salesforce, there’s a bit of a disconnect, maybe, with investing.
Avanish: Yep.
Mike: The relationship, especially in enterprise software, it’s just deeper. You know what I mean? You’re involved in the sales cycles. You know the teams. You’re helping to guide the application development. You’re a bit more invested.
Understanding that not everything’s going to be wildly successful is a hard thing. It was a hard thing for me. You’ve just got to be a little bit rational about it. You’ve got to find a way to balance the investment that you make in each one of these applications, each one of these partners, such that you’ve got enough of a portfolio to end up delivering value to the company and to your core customer base.
Avanish: Yeah. Mike, I’m advising a few companies on their platform and ecosystem strategy. One persistent question I get asked, which I think you may have a pretty unique point of view on, is the issue of whether someone should build versus buy versus partner. You talked about letting a thousand flowers bloom, and that’s a good philosophy in a platform company. But there’s always that question of, Should I be building that?
You’re a platform company, but you also have an application strategy. How do you think about those tradeoffs? When to partner, when to build, when to maybe go acquire someone? How does that come about?
Mike: My personal take on this is to ask yourself what your customers would want you to do. Okay? That’s the way I think about this. I think this is the Jeff Bezos/Amazon kind of mantra, and I like to follow it.
You’re always going to be faced with these questions, okay? “Hey, this is a great idea this partner has,” and, “This is on someone’s roadmap that we might get to in three to five years, so let’s reserve that for ourselves in order to make sure that the benefit pays off to us.” The way out of that trap is to think, if you were a customer, what would you want the company to do? Sometimes you might say it’s risky, and take the partner approach, because it really needs to work. That’s sometimes what the customer would want. Sometimes the customer would want you to have an open platform that facilitates choice, and facilitates options.Trying to put myself in the customer’s perspective to make these kinds of decisions and tradeoffs has always been very helpful.
It’s actually been really interesting, because I’m CEO now here at Guidewire. When I was at Salesforce, I was always representing a certain business unit. Maybe it was platform, maybe it was applications, maybe it was a little bit of both, but I wasn’t the CEO. Marc Benioff was the CEO, and he was making these decisions at the company level. So it’s been interesting to think about the role that I played at Salesforce, sort of fighting for platform and pushing a certain agenda relative to the company. Now, seeing that dynamic play out at Guidewire, I’m in a different role trying to make these decisions and balance these things. It’s certainly a challenge, but honestly, the advice I would give to anybody is just ask what your customers would want you to do. It sounds simple, but it’s just a really easy way to do it. We’re an enterprise software, so I think sometimes it’s pretty easy because you can actually ask them. You can call them up and you’ll get great feedback. That’s always been very helpful for me.
Avanish: Love that. That’s a very simple framework, but I think it always works. The customers will tell you. They’ll tell you without any hesitation!
Mike: Yeah. I have found they very often appreciate being looped in to those sorts of discussions, because it’s out of the ordinary. You’re not talking about a project that’s ahead or behind, or a feature that’s working. When it’s a strategy question, I’ve always found people very interested in just providing input on how companies should make these sorts of decisions.
Avanish: Yeah. Mike, you mentioned this is something you’re passionate about – you and I both are. I know you study the industry quite a bit and keep tabs on what’s going on. We talked a lot about Salesforce as one of the early – if not the earliest – cloud-focused platforms. What are other companies that you’ve seen out there that you think have taken on a strong position in building a platform and ecosystem strategy? Who might we look up to as folks doing something maybe a little bit different, but also doing it well?
Mike: I don’t know if this makes people laugh or not, but I always look at what the next level is of these kinds of things. Companies like Uber, or Airbnb, where they have legitimately created two-sided marketplaces, where they basically upended industries… Those are the business models, I think, that inspire me and that I’m thinking about here at Guidewire. In addition to delivering great software, delivering great cloud service, upgrading it seamlessly, all these things – is there a two-sided marketplace out there that’s inherently unlocked by something that Guidewire can do that facilitates a better industry?
Salesforce has just a huge presence. Amazon, Google, Microsoft. These companies have a lot of footprint. When you think about maybe the ninth degree of platform business model, what can be unlocked with the presence and the market potential that exists on these platforms? When you get to the point where you’re talking business model, that is the highest level of a platform. And maybe the lowest level is having an API that you can integrate. But when you get to say, hey, this is our unique business model, and this market exists because we foster its creation, that is really special. There’s only a few companies that can get to that. I think aspiring to that ought to be an important part of anybody’s strategy. Like I said, you’ve got to have patience and determination.
For me, it’s always about that next level. When you look at Uber, people move around in a different way because of this marketplace that they’ve created. Airbnb is another good example here. We don’t have to be at that level, but there’s a lot of things like Guidewire and CRM and ERP that you can imagine existing because of this. Which I think is an interesting way to think about the next evolution of maybe cloud and SaaS.
Avanish: I think that’s awesome. Not to put words in your mouth, but I think one takeaway from what you’re saying is that a platform strategy and an ecosystem strategy kind of go hand in hand, depending on what your core strategy business model is.
The second is understanding how to kick off that flywheel. You and I modeled a lot of this back in the day. At the core, it’s stickiness, right? You want to retain that customer. You want to provide value to them so that they have a reason to stay with you. Then, as you add other things for yourself or your partners, it continues to drive that greater value and gravity. In my book, that’s the definition of a great platform strategy.
Mike: I completely agree with you. I used two examples that are B2C, right? The B2C marketplaces, platforms, ecosystems, whatever you want to call them, are a big bet. A huge amount of investment has to go into instantiating these things. Once they’re there, there’s incredible staying power for that entity.
With B2B, the enterprise applications, you sort of have to evolve into it. It’s basically like, you have to start with an application; you have to add platform capabilities to it; you build an ecosystem around that success. I think the final phase is the other business opportunities and models you unlock based on the presence that you have in that market. You can’t start there, you know what I mean? I don’t think anyone will fund that; the odds of success are so out of whack. But if you evolve into it, you can steadily, in a determined way, build into that kind of model.
Avanish: You’ve got to earn the right, basically.
Mike: Yeah.
Avanish: Mike, this is awesome. I don’t kid when I say you are one of the people in the world who understands this the best. Any final thoughts as we wrap up our time here?
Mike: Oftentimes I talk to people who feel like platform is a misfit in the applications company. I would say, stick with it. Stick with it. It’s a challenge. There are tradeoffs involved in these kinds of business strategies, in making sure that you follow through on them, and in getting the company and the Board to buy in, as you say. But I just think that you should stick with it.
Ultimately, the companies that we all have heard of – if you list the top companies in the world in tech – they all have a component of their strategy that’s platform-and-ecosystem-oriented. Those are memorable, lasting, durable companies. Be determined and stick it out. Having that attitude helps you through the pain and sometimes suffering that’s involved in getting these strategies to success. It ends up being a major component around why these companies are so valuable.
Avanish: So you’re saying be platform strong.
Mike: Be strong. [Laughter] Believe in the vision, and don’t give up. Believe in that vision and you’ll get there.
Avanish: Mike, as expected, fantastic insights. Thank you for joining us on the Platform Journey. This is really the kind of insight that I think folks will benefit from. And, as always, great to see you.
Mike: Yeah, it’s great to see you too. I’m very happy to help. Thanks for the invitation; it’s fun stuff to talk about.
Avanish: Thank you, Mike. Take care.
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