We Hate You We Really Hate You Ed Esber Ashton Tate and Siebel Systems

Many people have pointed to Ed Esber's PR ineptitude as the main reason for Ashton-Tate's demise, but this is wrong. It is rare for PR disasters to destroy a company, though they can certainly hurt it and be very expensive. Ed Esber's primary mistake was in failing to understand that Ashton-Tate wasn't just selling a product; it was creating an ecosystem. dBase was a "platform," a basic set of tools and functions that could be adapted to create applications in a myriad of businesses. As such, its developer community was not simply important to the company's success: it was critical. Once this support was lost, dBase's fate was inevitable.

It is not simply software companies that build ecosystems; hardware companies do it as well. The classic industry example of this is Intel's microprocessor product line. When Intel rolled out its famous 8080, 8086, and 8088 chips, the chips were technically inferior to competing microprocessors from Motorola. (This, by the way, is why Apple was able to release a sophisticated GUI front end for the Lisa and then the Mac systems in the early 1980s while similar attempts for the PC stalled as developers struggled to overcome the anemic performance of the 16bit Intel chips.) But Intel provided a wealth of development tools and marketing assistance for its silicon and persuaded so many designers to build new systems on top of their microprocessors that they became the market standard. (You will learn more about this strategy after you finish reading William Davidow's Marketing High Technology: An Insider's View.)

If you are selling a platform-class product, you will need to do the following:

Make it easy and cheap to build or develop products around your platform: The larger and more successful your ecosystem, the better. Accept that over time, you may have to give your development tools away. That's OK; if you can't figure out how to make money selling classes on developing things with your stuff, training materials, add-ons, publications, conferences, and so on, and so on, you shouldn't be in the business.

Leverage your ecosystem: Had Ed Esber been smarter than he turned out to be, he could have used his platform to supply him with a sellable dBase upgrade in a timely fashion. Of course, he would have had to have been aware that the dBase development process was as deeply flawed as it was to have executed this strategy.

Compete with your ecosystem: It's expected that you will compete with your ecosystem; it's good for you and keeps you on your toes; just make sure you do it fairly. No preannouncements of products you will never ship. No sniping in the press. And if a developer keeps doing things better with your product than you can, buy them.

Support your ecosystem: Support your ecosystem with sales, marketing, and development programs. For an example of how to do this well, spend some time researching Microsoft's various developer support programs. IBM's Eclipse project is also well worth examining. Your ecosystem is a minimarket, and its health and development is an accurate predictor of your future financial fate.

Never go to war with your ecosystem. You will lose.

Siebel was a reprise of Ashton-Tate's sorry story and continued proof of this book's thesis that technology companies continue to repeat the same fundamental mistakes again and again. In Siebel we see a company that, like Ashton-Tate, actually decided to argue with its customers (and remember, dBase developers were Ashton-Tate's primary customers) when they took the opportunity to express their unhappiness with the firm's high-handed and unresponsive ways. The stupidity of this should have been immediately apparent to Siebel, but I don't think anyone at upper management had read this book.

A critical point to keep in mind is that Siebel, like Ashton-Tate, was a sales-driven company, and firms with this underlying character tend to make these types of fundamental mistakes. Driven by the need to generate revenue on a quarterly basis and make their numbers, sales-driven companies tend to do and say whatever it takes to get the money. While founder Tom Siebel expressed puzzlement over which of his marquis customers were unhappy with Siebel CRM, the reality is that the Siebel sales force knew exactly which customers were mad at them and why. Siebel just didn't care. It had already sold the software.

Continue reading here: An Interview with Joel Spolsky

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