February 13, 2007 l SAP l Palo Alto, CA

Moderator: Mitchell Kertzman – Partner, Hummer Winblad Venture Partners

Speakers: Jason Lemkin, CEO, EchoSign l Jim McGeever, CFO, NetSuite l Cliff Reeves, General Manager, Microsoft l Jason Wolf, Senior VP of Strategic Initiatives, SAP

Change is definitely afoot in the rapidly evolving Office 2.0 space. While a growing number of startups are rapidly innovating and pushing their web-based products to market, either for free or for a very appealing price point to lure small to medium-sized businesses, they need to accelerate their execution across all fronts as Microsoft and SAP will not be flat-footed in responding to this race for user acquisition and as big a piece of the pie that they can get.
Here’s a recap of what was discussed:

What is Office 2.0 and is it only for SMB?
-It’s about leveraging Internet ubiquity and connectivity to easily collaborate and exchange information with your partners.
-Remote web services and the web browsers are accelerating business at all levels; however, the people who stand the most to gain are indeed the SMBs.

Competition:
It used to be a lot easier to count on competitive moves from established players. How do our speakers feel about today’s competitive environment?
-Jason (EchoSign): Even today the dollars and cents haven’t changed very much. A $100M business is still $100M, and we don’t believe Microsoft would enter unless the upside was bigger. We’re nimble enough that we can leverage APIs that enable us to partner.
-Jim (NetSuite): From our perspective, it’s the little guys who we worry about, not the big guys. Small guys more nimble and are the ones rapidly producing on the vision… I don’t think anything is going to dominate. Web services are going to allow people the freedom to not be tied to one platform.
-Jason (SAP): I don’t feel that this white space is competitive. This pie is huge, and right now we’re growing our SMB business by 44% annually. As a large vendor, we do things slower. For SAP, we are not going to wait on the sidelines until this matures.
-Cliff (Microsoft): In this new world, we’ll get rid of the notion that only X number of competitors can exist in a certain space. Platforms will emerge and an over-crowed, highly competitive market will have a fall out.

Making Money:
The SMB end user is hard to find. How do you reach this lower end of the market, and how do you meet this market’s needs and make money in the process?
-Jim: In the early days, we’d sign worthless deals that cost a lot of money. It’s not so much that we need to find them but they find us. Referrals, word of mouth and CEOs talking to each other is invaluable. The web and search enables them to find us…
-Jason (EchoSign): Office 2.0 is indeed disruptive in the delivery of software. Adwords is limited, you cannot scale as there is not enough volume. If you have a product that is viral this helps. Press can get you more people. Marketing to this group is really challenging.

Better, Impossible or Unthinkable?
What will Office 2.0 deliver? In the words of Jean-Louis Gassee, will it be something that is better than before, something that was impossible than before, or something that was unthinkable than before?
-Jason (EchoSign): It was impossible to believe that someone could deliver an online collaborative suite a la Zoho or Thinkfree. On the web, with the pace of innovation and delivering this sort of collaborative product for free.
-Jason (SAP): The concept of SAP in the SMB market was previously unthinkable. Without web 2.0, we’d never be able to deliver this economically to this group. Web 2.0 technologies enable us to deliver to farmers in India to manage their yields, etc.
-Cliff (Microsoft): Web 2.0 is pretty darn exciting to think that, with no big cash layout, people can access valuable business services. In the long run, these apps will be the vehicle for JP Morgan or a mortgage loan bank, etc. Users will have access to more and more sophisticated services virtually for free.

February 13, 2007 l SAP l Palo Alto, CA

Moderator: Mitchell Kertzman – Partner, Hummer Winblad Venture Partners

Speakers: Jason Lemkin, CEO, EchoSign l Jim McGeever, CFO, NetSuite l Cliff Reeves, General Manager, Microsoft l Jason Wolf, Senior VP of Strategic Initiatives, SAP

Change is definitely afoot in the rapidly evolving Office 2.0 space. While a growing number of startups are rapidly innovating and pushing their web-based products to market, either for free or for a very appealing price point to lure small to medium-sized businesses, they need to accelerate their execution across all fronts as Microsoft and SAP will not be flat-footed in responding to this race for user acquisition and as big a piece of the pie that they can get.
Here’s a recap of what was discussed:

What is Office 2.0 and is it only for SMB?
-It’s about leveraging Internet ubiquity and connectivity to easily collaborate and exchange information with your partners.
-Remote web services and the web browsers are accelerating business at all levels; however, the people who stand the most to gain are indeed the SMBs.

Competition:
It used to be a lot easier to count on competitive moves from established players. How do our speakers feel about today’s competitive environment?
-Jason (EchoSign): Even today the dollars and cents haven’t changed very much. A $100M business is still $100M, and we don’t believe Microsoft would enter unless the upside was bigger. We’re nimble enough that we can leverage APIs that enable us to partner.
-Jim (NetSuite): From our perspective, it’s the little guys who we worry about, not the big guys. Small guys more nimble and are the ones rapidly producing on the vision… I don’t think anything is going to dominate. Web services are going to allow people the freedom to not be tied to one platform.
-Jason (SAP): I don’t feel that this white space is competitive. This pie is huge, and right now we’re growing our SMB business by 44% annually. As a large vendor, we do things slower. For SAP, we are not going to wait on the sidelines until this matures.
-Cliff (Microsoft): In this new world, we’ll get rid of the notion that only X number of competitors can exist in a certain space. Platforms will emerge and an over-crowed, highly competitive market will have a fall out.

Making Money:
The SMB end user is hard to find. How do you reach this lower end of the market, and how do you meet this market’s needs and make money in the process?
-Jim: In the early days, we’d sign worthless deals that cost a lot of money. It’s not so much that we need to find them but they find us. Referrals, word of mouth and CEOs talking to each other is invaluable. The web and search enables them to find us…
-Jason (EchoSign): Office 2.0 is indeed disruptive in the delivery of software. Adwords is limited, you cannot scale as there is not enough volume. If you have a product that is viral this helps. Press can get you more people. Marketing to this group is really challenging.

Better, Impossible or Unthinkable?
What will Office 2.0 deliver? In the words of Jean-Louis Gassee, will it be something that is better than before, something that was impossible than before, or something that was unthinkable than before?
-Jason (EchoSign): It was impossible to believe that someone could deliver an online collaborative suite a la Zoho or Thinkfree. On the web, with the pace of innovation and delivering this sort of collaborative product for free.
-Jason (SAP): The concept of SAP in the SMB market was previously unthinkable. Without web 2.0, we’d never be able to deliver this economically to this group. Web 2.0 technologies enable us to deliver to farmers in India to manage their yields, etc.
-Cliff (Microsoft): Web 2.0 is pretty darn exciting to think that, with no big cash layout, people can access valuable business services. In the long run, these apps will be the vehicle for JP Morgan or a mortgage loan bank, etc. Users will have access to more and more sophisticated services virtually for free.