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NetSuite CEO Zach Nelson: 'Pure cloud' strategy pays off

Sarah Putt | May 16, 2013
NetSuite's third annual conference opened in San Jose today with a keynote speech from CEO Zach Nelson that featured customer stories, new product announcements and some outspoken criticism of the opposition, notably SAP.

"In the IT industry there is a lot of smoke and mirrors and there is a lot of testosterone and there's a lot posturing and positioning. Part of this is positive, in terms of partnerships and those sorts of things, but part is really negative in terms of crucifying your competition and that's what we saw today" Kepes says.

Kepes noted that in the past, Microsoft has also come in for criticism, but it was only mentioned once today. "Maybe because Microsoft are less and less relevant, and SAP still is."

NetSuite appears focussed on growing revenues, while at the same time delivering a comparatively lower profit to shareholders. In New Zealand, the cloud-based publically listed company Xero is adopting a similar strategy. So what is the rationale?

"The technology industry is all about building scale as quickly as possible and then being acquired, because you become important. Profitability is secondary to growth and as long as you are sustainable, as long as your shareholders are happy, and as long as you are growing to point that you become valuable to an acquirer, then it's all good," Kepes says.

"Seeing the reaction to Xero's strategy of growth and not profit has been a good example of the fact that in New Zealand we aren't used to a different way of looking at things."

Kepes describes the investment industry in New Zealand as "unsophisticated", although he notes that more tech companies are listing, or talking about listing.

"The thing that goes with that is we need to develop more maturity and our investors need to understand technology ecosystems and the life cycle of technology companies,"Kepes says.

"Our start-ups and our companies need to understand the global reality and that's sadly lacking."

Although Kepes points out that there are lots of initiatives trying to give New Zealand companies exposure to what the reality is on the global stage.

"We're missing good governance and if you look at the Institute of Directors and the make-up of the boards of our publically listed companies, apart from a few exceptions, it's pretty limited in terms of understanding this new world."

When governance and analysis of the technology sector improves, Kepes says the investing public will become more mature and "it all starts cycling from there."

Sarah Putt is attending SuiteWorld as a guest of NetSuite.


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