Mobile Disruptions

Sybase's John Chen on the opportunities he sees as corporations rethink how to collaborate.
This is a transcript of a recent interview by Forbes' Quentin Hardy with John Chen, chief executive of Sybase.

Forbes: I'm here with John Chen, CEO of Sybase. Sybase is a long-standing database company in the tech business, a great survivor, but under your leadership a particularly interesting survivor, because you came to it at a time when things were particularly troubled. It had been rather overwhelmed by its competitors, fairly low market share.

You set things right, but then, you focused on the theme we like to think about on this technology channel, which is disruption and engaging with disruption to make it your ally. So, tell me a little bit setting things right and aiming at a disruptive force.

John Chen: OK. Thank you. Let's see, I actually came in late '97, early '98, and into the company, as you pointed out, we were losing market share and we were losing money. And we ran right into this kind of the dot-com boom, meaning that, you know, I was losing a lot of employees.

And in fact, interesting enough, at one point, I was having a 45% turnover in the company. You know, 45% turnover is just a staggering number, but one you could address. I told the board: I don't have to make any cuts because in two and a half years, we'll have a new crew here. You know, assuming I could hire anybody, you know, anybody that wants to come.

In this case, you were feeling the disruption of the Internet.

Right. I was feeling it. And we were late on that. We missed the application wave, and we were late on the Internet and app server. It was quite difficult, I would say. But anyhow, you know, thank God, we have a set of very loyal customers. They're running or are using our software to run mission-critical systems like trading systems, train-ticketing systems and all that.

And so, the first thing we do is go back and really secure that base. And then, we get our expense structure correctly so that we could at least make some money, because without making money, it doesn't have any confidence in the market that people should continue to buy from you.

So anyway, we did that, and we were successful, but we've got to grind it out. I mean, in a number of years, we had to take a lot of abuses that we'll talk more later. But we kept our eyes on the ball. And so, early 2000, things started to turn for the better. We now knew we could make money. And now the question is, who we want to be when we now grow up? Again, because we know this is playing defense. Playing defense is important but never wins you the Super Bowl.


And so, we know we're playing defense. And then I kind of sensed at the time the employees started to get a little bit restless on just cutting costs and just kind of stay focused on the fundamentals. And we had to get a win on something.

Are you saying that you have to have a sense that the employees want to be part of something that's growing?

Absolutely. I mean, you know, in the Valley especially. Actually, it's probably true in every industry around the world, every company, right? But in the Valley especially, people have a lot of choices, and they could work for a lot of companies, and a lot of great companies. And it's fun to do so. I could understand that.

So, you got to come up with something that, you know, makes people feel excited and that are somewhat logical. So, we did a lot of soul searching: What do we do well? What are the things that customers most need that they don't know yet? We figure if they know it already, then my big competitors are already working on it, and I'm kind of a day late and a dollar short again.

And so, the combination of those two led us to mobility. At the time, we saw a lot of e-commerce, you know, doing business on the Internet. We saw a lot of people trying to use devices as phones but not for data. And we said, "Wouldn't it be great if these phones actually become a data source?" And one thing led to another, [we realized that] broadband is coming, and wireless broadband is following. Although everything took a little longer than we expected.

Your director of engineering gave me another great example that I think the viewers could benefit from hearing about. You realized that in the mobility world, people were trading in phones that worked all the time for phones that worked some of the time.


But they had to have them. Even if the call quality was worse, even if the connectivity was not guaranteed, it was an object they had to have. So, obviously, there was something fascinating here that was going to grow.

Right. And then, when you look in emerging market, if you just look at the United States market, you may have missed a trend. OK. You're looking at emerging markets, China has more cellphones so every day [than was thought possible] in anybody's imagination. And partly the reason is because they don't have a fixed line.

So you look for behavior that indicates people on the surface not acting logically, but then when you think about it you see the logic, you identify the disruption?


What do you do about it? How did you take your company to the disruption front?

OK. So, the enterprise, you know, that I'm serving today, they need to adopt to that. Whether it is an employee using these devices or the whole, you know, consumer out there that they like to reach, [they] need to use the device. Then, we start focusing also on people like the telephone company. They need to get revenue.

You know, [the phone companies] spent a lot of money on the 3G licenses. And they're all in debt, and they're laying off a lot of people because this is like a highway without cars. So, I'm trying to figure out how to provide the on ramp and off ramp and try to make money on that. And so, one thing led to another. We put together a fantastic mobility story.

You looked at the overall system of wherein this disruption was going to take place, and you think, "How can I attach myself to this part, how can I attach myself to that part?"

Right. You have to build the ramp one at a time. But again, I think the basic fundamental question is: What could you do that you believe that the market needs but they don't know yet? If you could answer that question, you'll come up with something.

Isn't that kind of an infinite question? What's the thing they don't know? How are you supposed to know that?

Oh, you read the trade press, you talk to customers, you know they're not talking and thinking about mobile. At the time, I talked to one of the major firms on Wall Street--and I'm not going to name names--and I asked the CIO and said, "What's your plan on mobility?" They looked at me and they said, "We use BlackBerry."

And I said,"OK, they don't get it." They thought they got it then. That was not the question. I mean, you didn't answer the question. So, because the lack of the depth of the answer, I knew that we had a lot of opportunities. And thank God, we did. I mean, we stuck with it. In the beginning, it was very difficult.

Wait a minute: The BlackBerry's a pretty sophisticated device. Did he mean, "We just use e-mail"?

Right. When he said "BlackBerry," he just meant e-mail. It's a different server on the side. It's great stuff, don't get me wrong, but it's not an integrated component. [We needed to] just integrate that into their day-to-day life. In the business case, a lot of people could make a lot of money on that.

There were a lot more parts of the business that he wasn't exposing

Absolutely, that he wasn't thinking about. They think that was the answer. So, I figure if I could come and offer him a lot more than that, there's a huge business there.

There's a business.

Right. So, that's how we got to it.

OK. Well, so far, so good. Your stock is up 20% [over the preceding 12 months] when everything else is down 30%. That's good news.

Yeah. That's great news.

You made peace with that disruption. Do you see future disruptions you want to engage with? Is this a good kind of rolling business model?

Oh, yeah. I think we're in the tip of the iceberg on mobility. I mean, we're fortunate today, we're at about a $400 million business in mobility, and it's growing very rapidly. I think where we are is still very, very early. The next generation, which everybody's working on whether it's Cisco or IBM, even system integrators, is the whole idea of how you bring computing, collaboration and communication together in a very intelligent way, meaning contacts based.

You need to know what all these messages mean. The system actually knows what it means. And not just by forwarding you a bunch of bits and bytes, but to actually interpret it on the fly.

Usage is everywhere in the world. I mean, every industry from retail to defense to banks to everywhere.

And so, I think this is the new paradigm that's coming. It's not hard to see that everybody is focusing on it. Cisco is working on those, and Research in Motion, of course. Some of them are more focused on devices. Some of them are more focused on computing paradigm. We're more focusing on computing paradigm.

To begin with, collaboration sounds like an offshoot of wireless, but you're saying it actually grows to become something much more than that. Give me an example of how that's going to work, and what would be the disruptive force around collaboration in an enterprise?

A very simple example: You have an application running and let's suppose that you receive a text message on your device. It says [hypothetically] "The yen to U.S. dollars has now tripled," you know, a point of interest to you. Today, if you want to know what does that mean, you've got to start calling, you're going to start calendaring a meeting, you've got to do all that stuff. In the future, all you need to do is click on one of the icons, you will be able to connect with all the experts that you already defined on a conference call that is generated automatically for you.

And some to mobile devices, and some to landlines, some screens, whatever's going on?

Absolutely. And so, you know, that's just a very simple, first-generation stuff.

Well, it's very disruptive in as much as the company moves from being a kind of org chart to being a series of interlocked social networks.

Right, it's a knowledge base.

Around finance, around the product design, around knowledge of a country, however you want to define it according to your rules.

Right. It's an expert space decision-making environment. And it's going to be big.

That's very challenging.

It will make corporate Facebooks. It will be a necessary thing in the future. Facebook actually tells you what I'm interested in, what I'm good at and how I'm connected to ecosystems. Maybe friends that are friends or a cousin of your friend of your high school, you know, roommate or something. But that's how you could reach.

And in the corporate world, and in kind of a collaborative world in the ecosystems, I may be able to reach everybody in just one shot. And this is the beginning. I may just give you example, but that was just a lot of these different examples.

Do you have to build a whole new business around that? And does it change the way that you work inside Sybase? Are you thinking not so much around titles as around expert linkages if you organize the company.

We are moving that way slowly. It's always harder to change the normal. We know we need to change that. The good news is, kind of, because of our own, you know, thought process and our engineering and our development, our IT organization is adjusting with it. We've done a lot of things: For example, we don't keep any data on any PCs that is not connected by wires. We don't keep any data anywhere. So, to us, it's kind of a virtual session.

A common pool.

You could go to the hotel and get on one of those PCs that you can find in the business center, and we will give you a string of instructions to get you back into the corporate data back end. But when you leave, there will be no residual on that particular device.

Hopefully, it will take you to a point where building these databases and finding out customer needs will help you organize Sybase as well. Are you concerned that we're going to get into a repeat of the Sybase story, where the more powerful, wealthier competitors start to overwhelm you, or can you keep inside this and own this disruption?

If it's not a big enough party, it's not worth getting an invitation. It will come. When there is money, all the big competitors will be there. What I wanted to make sure we do is we have a rightful seat around the table. I'm not a believer that winners take everything. I think that if you can provide value, you'll be part of the food chain.

And do I worry about it? No, I don't worry about it. It's like it may happen in the future. Yes, it may happen in the future. And the one thing that we need to do is, keep focusing on what value we add which is unique, not spreading ourselves too thin.

Great disruption should touch everyone, right?

That's right.

If you're the only one working the space?

We won't be.

Thanks a lot, John.

Thank you.

BY Quentin Hardy

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