Founders at Work.pdf

Ray Ozzie 109
We were pitching Groove as a fairly horizontal technology. We were applying
it to productivity challenges, but to the extent that it had the potential to
catch on broadly, they would certainly have been the biggest competitor.
Livingston: Looking back, was the Microsoft threat real?
Ozzie: Oh yeah, they are brilliant technologically and from a business strategy
perspective. If you believe that Microsoft is your competitor, it’s better to keep
stealth and then embrace them at the right time, when you believe it can be to
your advantage to embrace them. In the case of Groove, we were having distribution
challenges, we needed money, we were raising a round. One of the
biggest questions we were encountering with our enterprise customers was
“Why isn’t Microsoft just going to crush you tomorrow?”
And although I brought some credibility to the table because of my background
at IBM, having Microsoft as a backer only helped us within those enterprise
accounts.
Livingston: Back to Lotus Notes—were you already working on an application
when Lotus discovered and then funded you? What was the history there?
Ozzie: As I mentioned earlier, I first wrote the spec for Groove in 1982. But I
couldn’t find funding for the idea. So in 1983 I was hired by Mitch Kapor and
Jonathan Sachs at Lotus Development, just after Lotus 1-2-3 release 1 had
shipped. I did a small amount of work on 1-2-3 1A, then led a small team to create
Lotus Symphony, one of the first “suite” products. I agreed to do Symphony,
if Mitch would help make introductions to VCs and help get Notes off the
ground. The day Symphony shipped, Mitch made good on his word. But
because Lotus was in a good cash position, rather than introduce me to VCs,
Mitch suggested Lotus supply the capital. I then formed Iris Associates in
Westford, Mass., with three other programmers in December 1984.
Livingston: What surprised you the most?
Ozzie: How difficult the go-to-market challenges are. I suppose it shouldn’t
have surprised me, but in both the cases of Notes and Groove, building a market
in something that’s new can be as, if not more, challenging than building the
technology. We were building some very complex technology, and I thought,
since we were developing to what seemed to be a fairly straightforward customer
value proposition, going to market would be a lot easier.
Changing people’s habits is extremely difficult. Notes came out at a time
when things were kind of booming from a tech perspective. But Groove came
out at a very difficult time. It was just post-Bubble and IT spending was really
down. If you are serving the consumer, everyone expects not to have to pay for
anything. In business, if you’re talking with IT, it’s just very difficult to justify
any incremental spend.
I guess as a tech entrepreneur I would nurture relationships with people
who are outside your skill set on the marketing and sales side or business development
side. Relationships you know you can trust. As a technologist, it’s very
difficult to hire someone on the marketing and sales side because they’re so different
than technologists and you don’t know who to trust. It takes about a year