When one thinks about the companies that laid the foundation of the commercial internet, one thinks of companies like Cisco, AOL, IBM, and Sun Microsystems, among others. Sun was co-founded by Scott McNealy, who did not have a technical background, and yet ran one of the most successful tech-centric companies of ‘80s and ‘90s. The company created Java , Solaris Unix, and the Network File System to name three of many products designed by the company. Oracle purchased Sun Microsystems in 2010 for $7.4 billion, and since then, McNealy has invested in and advised a number of technology companies from his home-base in Silicon Valley.
In 2010, he co-founded Wayin, a social intelligence company that integrates social content into new experiences for consumers and delivers greater value and control for brands. The company recently merged with EngageSciences, a British social media firm that McNealy suggests will give Wayin a dominant position in his space.
(To listen to an unabridged audio version of this interview, please visit this link. This is the 16th article in the IT Influencers series. To read past interviews with Meg Whitman, Walt Mossberg, Jim Goodnight, Sir James Dyson, and former Mexican President Vicente Fox, among others, please visit this link.)
Peter High: Steve Case recently wrote a book called The Third Wave in which he describes the three waves of the internet: the first wave from 1985 to 1999 of building the internet, laying the foundation, and organizations like AOL, Sun Microsystems, Cisco would typify that; the second wave from, 2000 to maybe 2015, which was exemplified by the app economy, the mobile revolution, certain social and e-commerce startups. Leaders of the second wave include Google, Amazon, Facebook, Twitter, etc. Now, he defines this third wave as involving the Internet of Everything—this ubiquitous connectivity that allows entrepreneurs to transform major, real world sectors.
I would love your thoughts as someone who has been a leader across each of these “waves.” Case posits that this third wave is going to look a lot more like the first one than the second one. He highlights that the second required people, products and platforms, but the first added to that the need for greater partnership and an understanding of the nuances of policy and working with the government. I am curious about your own perspectives on that analysis, as well as your own thoughts about the evolution of the internet as you see it.
Scott McNealy: We talked about all this stuff back in the ‘80s and the ‘90s—the Internet of Things. I was on the cover of Fortune with a Java ring on, and it might have been back in the ‘80s, early ‘90s, and I always used to talk about how price lists would go away and everything will be a bid ask, and I said eventually people will bid out their time by the hour and that will be the last frontier unless government can regulate us back into the dark ages again. The second our company saw the browser and the web and threw Java on it, we started talking about the Internet of Things. I used to say everything with a digital, electrical or biological heartbeat would get connected to the Internet, and people looked at me like “what are you talking about?” We said the network was the computer in the ‘80s; now we call it the cloud. That is smarter: it is only one word instead of a few. But all of these concepts were out there. And no price list or bid ask system. But the biggest challenge we have is the meddling of government bureaucrats getting paid off by big companies to prevent the new stuff from happening. Have you ever met anybody who got in an Uber and thought it needed to be regulated? I am talking about a basic consumer, not somebody with a vested interest in a cab company or city revenues. And even cabs now are getting better because Uber came along and just destroyed them, so why do we need to regulate that stuff? So my biggest concern for the future of the internet and the written and spoken language of computing is government intervention. There is so much, massive, government scope creep that they are getting involved in everything now, whether it be net neutrality, whether somebody is an employee or not, healthcare, we have ignorant voters because they are being trained by the government. The government is a monopoly. We know monopolies are inefficient, not innovative, and corrupt. We know that. That is why we have anti-trust laws. Well, the government is a monopoly. Why do we let them do healthcare and education, or even get near banking? It is stunning to me.
High: In 2010 you founded Wayin, a real-time digital marketing software company. Can you describe the original inspiration for the idea? Since it was founded relatively soon after Sun’s acquisition by Oracle, was this something that had been in your head for a while, or was it something you began to think about in earnest upon breaking away from the company?
McNealy: When I left Sun I was advising companies for free and getting very busy. I found out that “free” had infinite demand. Eventually, I said I would advise for stock, and even then I had basically infinite demand, so I was still overbooked, but a buddy of mine from New York called with this idea that the network was the computer but the database was the goldmine now, and so everybody is looking for ways to engage the consumer and do some things real-time and on-air. We came up with an app that was part what we are doing today around social, part Instagram, and part social network. We started off by doing an Instagram on your mobile phone with voting attached. If we had just done pictures, we might have been able to beat Instagram, who knows? But anyhow, Instagram won—no one wants to pay for voting—but this whole idea of engaging the customer to capture demographic, geographic, psychographic, attitudinal information, as well as using social to influence, to persuade, engage, inspire, and reassure somebody at the moment of truth was all part of the plan from the beginning. My buddy, Scott Johnson, said “Let us go start a company.” I have been running it for about a year.
In the last year I have spent time building the team, supporting the team, putting a really good planning process in place, building up over $15 million to make us one of the best funded companies in this space. We created a really solid board for the organization that is connected with really solid customers. So it all felt like a good start. But I was thinking “Oh my gosh, I am going to be here forever.” So we started a CEO search, but all of a sudden we ran into EngageSciences and saw how complimentary they were: they had a CEO and we did not; they had a CTO, we did not; they had a senior product marketing guru, we did not; we were strong in Asia and the US and South America, they were strong in Australia, New Zealand, the Middle East, and Europe; they did digital activation and engagement campaigns, we did social digital marketing campaigns, so we were complimentary there; the technologies were all built on similar technologies from an engineering and programming language and other APIs; we were both cloud-based; we were both using Amazon; and we both are Salesforce users for the administrative piece. We looked at this and the more time our teams spent together, the more we said “Hey, this just adds to our portfolio.” The only bit of product overlap is we are on our second generation of social marketing platform, and I am comfortable saying it is probably the best in the industry right now. EngageSciences had a little component of their platform that was a first generation and quite immature social piece so the real opportunity here was they could just stop doing that and just piggyback on our platform. And our platform inserts our social campaigns seamlessly right into their broader digital engagement platform. The engineering integration is a couple of seconds.
High: Where is the combined entity going to be based?
McNealy: Headquarters will be Wayin headquarters in Denver, where Richard Jones is moving to from the U.K. In this space, you want to be in the US; you want to have access to US capital markets, you want to have access to the US customer base, and you want to have access to the US engineering. Although we have global reach in all of those areas, it is still nice to be local. If you are trying to hire people in San Francisco now, good luck. Try and hang on to them. Try and find a house for them; try to pay the taxes for them and all the rest of it. We have got an incredibly low cost of operation out in Denver. You can find a parking spot and you do not have the traffic jams and all the rest of it. The skiing is way better, and it has got a great airport where you can fly direct to every Chief Marketing Officer in the country. So it is a good spot to be.
High: You have speculated that with over half a billion campaign entries on the combined platform between the two companies, Wayin and EngageSciences, you have about one in fourteen of the world’s population having already participated in a brand campaign run by the two entities. You speculate that that is going to be one in seven next year. Can you explain the path to that kind of growth?
McNealy: It is the partnerships we have lined up. We have a heavy recurring model and we know the campaigns we are going to be driving, we know the customers. For instance, with Major League Baseball, we signed them up and we are rolling out through all their stadiums. Like I said, everything is a life support system for the database and this marketing database that will allow you to match ready and willing buyers with sellers. That is the Holy Grail out there right now. It is pretty easy to see that straight line going there.
High: For organizations’ CEOs, CMOs, CIOs, other executives with whom you are meeting to impart wisdom about Wayin’s offering, how sophisticated do you find the buyers are? How has that evolved in recent years, especially among some of the larger companies?
McNealy: Three-quarters of the ad budgets are still traditional print and media, yet today, everybody worldwide everybody is spending more time in front of a digital screen than they are a TV. What we offer in the digital marketing space we think is now the broadest and most sophisticated next generation digital marketing engagement and activation campaign platform. Every three weeks we give you a new version of it. What this gives you is what I call provable, as well as improvable, campaigns. In other words, we can prove, we can show you a real-time ROI dashboard on all of the key metrics. You can set your own values for what is a minute on site worth, what is a retweet worth, what is a click the buy worth, whatever, and then you can keep your own customized dashboard. Then we can start doing A/B testing and see what social works better, morning or night, what colors work better, what visuals work better, does the quiz work better than the sweepstakes, and we can do A/B testing on your ad dollars.
Now contrast that to running two different ads on consecutive nights for a car. How do you know which one sold more Mustangs? Think about a billboard on the side of the road versus another billboard. You have no idea who viewed it. You have no idea whether it drove sales. You have no idea which one was better. What we are looking at is the arbitrage as people move from this random flare in the night kind of thing and you have no idea what is going on down on the ground. We are giving people that great individual digital marketing platform—prebuilt, ready to go, custom visualizations, custom implementations. We add their colors, their logos, and then we hand them a spreadsheet and a massive database of the people who engage in their psychographic, demographic, geographic information, and away they go. We send them a spreadsheet, an Excel spreadsheet, with all the customer information on it. What TV ad does that? What billboard gives you a spreadsheet of everybody who saw it?
High: What do you consume in order to remain abreast of change in technology?
McNealy: First, I have four teenage boys, so there is one source. I have a younger wife who is technically savvy. She is the CIO for our house and she is a digital native, where I was not. So that helps. I have a vast network. I do advising for thirty or forty companies who bring me in all the time and look to me for advice and I will do three breakfast meetings in a row, so that helps. I am on a couple of large technical advisory boards with major telecoms and other technology companies in a broad range of fields. And then just following the right folks on Twitter can keep you abreast way faster than the old days when I used to wait once a week for Forbes and for InformationWeek and for InfoWorld to come out and see what is going on. It just happens so fast now. There is no way you can keep totally up to speed. Jordan [Slabaugh, Wayin’s VP of Marketing] has trained me enormously over the last year on the intersection of technology and the CMO, because in my day it was mainly the technology and the CIO or the manufacturing folks. Technology really took a while to get to the Marketing and Sales arenas.
High: What do you think about the future, as somebody who has interacted with CIOs practically since the advent of the role? In some ways, what you have just described is the CIO’s fear: that somebody who is a technologist running a technology company is now seeking the CMO, rather than the CIO. What do you think the future holds for the Chief Information Officer role?
McNealy: The cloud is now the infrastructure. Integration is done by the cloud supplier and the app supplier, so their only role left is to truly be a become the Chief Information Officer, and a lot of the traditional, old school ones never really worried about how the information was used, what it meant to revenue, to profit, to productivity, to the bottom line, all the rest of it.
In the old days, the network was the computer, and that is where you have Cisco, EMC, Sun, and Oracle. Now it is all about Big Data and algorithms and analytics and all the rest of that stuff, statistics being a big one. So that is where the CIO has to go, but so many of them are wannabe computer designers or data center operators, and the CIO and the CMO who are trying to drive revenue, or the CFO who is trying to cut cost, are all looking for an answer in the data.
High: Are there trends, other than social and Big Data analytics, as you look out three, five years?
McNealy: I was talking to John Hennessy, the President of Stanford, one year back, and I said, “In one sentence, John, what is the mission of Stanford?” and he said, “It is to be at the intersection of technology and medicine.” I thought that was just brilliant. I think anybody who can study medicine—chemistry, biology, computer science, Big Data—you are going to be the most employable person in the world.
You know what I am telling my four boys? Chase a job. Be a taxpayer. Support your family. Get off the government dole and do not chase your dreams. After you have gotten totally successful and financially independent, then go chase your dreams! But until then, chase a job! It is pretty easy. Go look and see who is hiring and in what jobs and go get a degree in whatever they want. There are lots of people who are looking for strong technical people, both in Big Data and in medical and robotics and the Internet of Things. There are a million places out there where the demand is infinite for people who have a real sense of purpose and a real sense of duty and a commitment to that.
