There’s Method Behind Zach Nelson’s Madness

Zack Nelson

NetSuite CEO Zack Nelson

Marc Benioff, CEO of Salesforce.com, may be the poster boy for SaaS (software as a service), but watch out for Zach Nelson. The CEO of 10-year-old NetSuite has transformed the 10-year-old company from one that was barely limping along to a powerhouse that is growing rapidly.

NetSuite’s (NYSE: N) revenues for the six months ended June 30, 2008 were $70.7 million, almost 46 percent higher than the $48.7 million it chalked up in revenues during the same period in 2007, according to the company’s latest 10-Q quarterly report filing, on August 13.

Nelson has held down high-profile marketing jobs at major Silicon Valley companies over the years, and has become something of a legend because of his marketing stunts, including one where he draped the better part of a building off highway 101 in a red plastic promotional banner.

There’s more to those stunts than meets the eye, however; Nelson is a cool-headed man who will do what it takes to get his company to the top, and, if that includes wild and crazy stunts, so be it.

NetSuite, based in San Mateo, Calif. has seen rapid growth since Nelson joined as CEO in 2002. It has chalked up 10-fold revenue growth, and the workforce has kept growing, from 544 on June 30, 2007 to 901 on June 30 2008 by the company’s own account. Late last year Nelson took NetSuite public in the biggest IPO since Google, raising $185.4 million.

As far as Nelson is concerned, NetSuite has “the opportunity to be the next great software company,” and he is going after that goal aggressively. He recently opened up an office in Hong Kong to target the Asia-Pacific market, especially in Hong Kong and China, citing analyst reports showing that the SaaS market in the Asia-Pacific is growing rapidly.

Marketing skills

Nelson’s marketing skills were established early on when he was working at Silicon Valley-based public relations agency Cunningham Communications, which Motorola had hired to do positioning and branding work for its 68000 chip.

“I had the idea for what we would call an ingredient branding strategy for Motorola, like Intel Inside for Intel, and Zach came up with Powered by Motorola,” Andy Cunningham, owner of Cunningham Communications, recalls. That positioning established the Motorola 68000 chip in the public mind.

Five things to know about Zach Nelson

Fear was his great motivator. “In the early days, it was fear that drove me,” Nelson said. “I wanted to make sure I hadn’t made a huge mistake with my life.”

Nelson holds a patent in the field of application integration, and has a few others pending approval.

Deep down inside, he wants to kill off Salesforce.com. Okay, that might be a stretch. But he did give a candid assessment of his SaaS rival in this video interview.

Can Zach Nelson rap? There is no video, but his first tech employer Andy Cunningham thinks so. “He can rap. I think he’s a good writer and can do the poetry part of rap,” she said.

The dyed-in-the-wool baseball fan convinced Oakland Athletics general manager Billy Beane to join NetSuite’s board of directors.

Later, as CEO of McAfee subsidiary MyCIO.com, Nelson draped the north side of the 11-story MyCIO building in red plastic as an advertising gimmick. “You could drive down the 101 freeway and see it from three miles away,” he chortles. “Those were the crazy dot-com days when you were always trying to one-up everyone else.”

Eight years later, Cunningham still remembers that stunt. “Zach is very clever and capable,” she said. “He’s creative and sees things from a different point of view.”

To market NetSuite, Nelson showed considerable chutzpah when he went head to head with software giant SAP. In 2006, Nelson planned a cocktail reception in a hotel opposite the Orlando, Fla. convention center where SAP was holding its premiere user conference, SAPPHIRE. Dubbing the reception SAP for the rest of us, Nelson sent out invitations reading “Who will become the SAP for the midmarket? (It Ain’t SAP).”

As it turned out, the reception was canceled (a report at the time claimed SAP pressured the hotel to cancel NetSuite’s reservation, which it had a right to do under its contract limiting competitive events), but he at least got NetSuite’s name out there.

Next page: A baseball fan finds a match

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A rabid Oakland Athletics baseball club fan, Nelson put his passion to work on NetSuite’s behalf. He convinced the ball club to buy NetSuite for use in-house, recruited the team’s general manager, Billy Beane, onto his board of directors, and taps the club for any possible promotional opportunity he can get it involved in.

The manic marketer is just one side of Nelson’s character. Another side is a cool, forward-looking man who thinks hard about a situation before taking a major step.

Take his choice of career for instance. Groomed by his family in Omaha, Neb. to be a doctor, Nelson spent two years looking into whether or not medicine was the right choice for him after having been accepted at medical school. “Being a doctor is a big commitment and I wanted to be sure I wanted to do this,” he explained.

He also serves who stands and waits

Nelson spent those two years running medical clinics for the Veterans Administration in Palo Alto and quizzing all the doctors he met about the profession. “They all said they wouldn’t go into medicine again even though they loved the profession,” Nelson said.

So, he turned down medical school and began working as a waiter at downtown Palto Alto seafood restaurant Pearls. While working there, he met Andy Cunningham through Elizabeth Horn, who is now his wife.

Cunningham promptly offered him a job interview. “In my business, the key is being intelligent and being able to deal with people, and I saw that at the restaurant — he’s very bright, really good with people, and understands the service side of things,” Cunningham said.

But isn’t it quite a jump from pre-med to business, especially when you don’t have a business degree? “I think there are lots of corollaries between anthropology and marketing and basically running a business, because you’re building communities that you’re the chief of,” Nelson, who has a Master’s degree in anthropology, said.

That ability to see connections between seemingly unrelated things and leverage what he has to get the result he wants is typical of Nelson, Cunningham said. “He can see the future and mold the present to get there,” she added. “That makes him strategic.”

Nelson “has a knack for figuring out how to position things so that winning will come, whether he’s marketing something or communicating an idea, like Steve Jobs,” Cunningham said. That “requires strategy, vision and the ability to influence people to do things,” she added.

There is a fine line between motivating people and manipulating them, and it is defined by the kindness and empathy a person brings to the table. Nelson has both qualities, Cunningham said. He is also tactful and diplomatic. “He’s really forceful in a nice kind of way,” Cunningham said.

Next page: From RISC wars to SaaS

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Long-time friend Paul Greenberg, president of analyst firm The 56 Group, describes Nelson as “unpretentious and a genuinely good human being,” while analyst Denis Pombriant, who has known Nelson for about five years, describes him as “amazingly kind and sensitive” because Nelson related well to Pombriant’s wife’s job of teaching people with special needs.

Loving every second

But shaping the future is what Nelson does best. From Cunningham, where he marketed the Motorola 68000 chip during the RISC wars, he went to Sun, where he marketed Solaris, “the next layer of the stack,” he said. Then he moved to Oracle, then to McAfee, where he created McAfee.com, which he describes as “the first SaaS solution ever,” in 1999, and then headed up MyCIO.com.

Nelson loves his job. No, really. “When I was working at Oracle, I was pulling out of the office one day and had this thought — Larry [Ellison] had just made a billion dollars; why did he continue working when he didn’t have to?” Now he knows. “When you find the job you’re made for, you don’t consider it work,” he said.

“People ask me what I do when I’m off, and I say I work. It’s like a giant puzzle, the pain is the next problem you have to solve and you know you can solve it.”

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