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| Home - CEO Spotlight - Jul 02 Issue |
In the Groove: An Interview with Ray Ozzie, Groove Networks
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Ray Ozzie: Certainly, given the current economic situation, IT organizations are working with low-growth, or no-growth budgets and require demonstrable ROI from every initiative. For emerging software vendors with unproven solutions, that requirement is even more stringent. That said, we believe that there is a real need to improve the way businesses interact with members of their value chains. As I’ve mentioned, our core tenet is that a decentralized business environment requires a decentralized communications architecture such as Groove to better support the strategic imperatives of the business. Today, the primary paradigm for cross-company collaboration is email. Email works in that it seamlessly connects individuals across boundaries, be they temporal, geographic or organizational. But email breaks down when business processes require richer collaboration functionality. We believe Groove retains the end-user driven model of email, but adds real benefits including richer tools, end-to-end security, presence awareness and more. At a fundamental level, these benefits allow dispersed project teams to get work done faster. It’s all about reducing costs, or increasing the top line. We believe Groove contributes to both.
Sterling Hoffman: How often do you as CEO get involved in sales situations? In your opinion, are companies buying the product because they believe in Ray Ozzie or because they believe in the product?
Ray Ozzie: From time to time I do engage our enterprise customers in sales situations. But I’d object to the assertion that any company would commit funds and resources towards any IT solution based solely on the reputation of one individual. Software development is inherently a deeply collaborative art, and without the collective talents of our development team, solutions group and sales and marketing teams, Groove could never have become what it is today.
Sterling Hoffman: What has been the overall response from clients using Groove? Do you have any particulars on how it has impacted their businesses?
Ray Ozzie: We’re a bit early in the timeline to report on Groove’s direct impact on the bottom line of our enterprise customers’ businesses. As I said earlier, most of our large customers are piloting the software with several small teams inside and outside their companies. I can report that results of these pilots have been very positive. I would encourage you to speak to one or two of our customers to solicit feedback from the source. We can provide their names if you’re interested.
Sterling Hoffman: What was your adoption rate when you initially launched Groove? Who were your fastest adopters?
Ray Ozzie: As a private company, we don’t release download or adoption rates. I can tell you that one of the metrics by which we measure adoption is downloads that were initiated by a Groove invitation from another user. That percentage continues to increase month by month, which is a strong indication that there is a network effect with Groove. More than 50% of the people who download our preview edition indicate they heard about Groove from a colleague or friend. As I indicated earlier, the biggest adopters have been companies in the pharmaceutical and professional services industries. We’ve also experienced significant interest from various government organizations because of our ability to address a primary need today – secure, cross-agency communication, collaboration and coordination of activities.
Sterling Hoffman: What are your key performance indicators for the next 12 – 24 months?
Ray Ozzie: This could be a long list, but the two key ones are the number of new customers we’re able to attract, as well as the rate of adoption within those accounts. We’re focused on reducing the sales cycle, and increasing the rate of adoption among our early customers, particularly enterprise customers. This is a challenging business environment in which to accomplish those objectives, but I’m confident we’re doing what’s required to meet these objectives.
Sterling Hoffman: What have been some of the more significant achievements of Groove since 9/11?
Ray Ozzie: Three jump to mind. 1) We established a Government Systems Division in the Beltway to focus on the government’s need to enhance secure, cross-agency communication and collaboration among various agencies. 2) We attracted some significant financing from Microsoft, and we hired Chuck Teubner as president and COO. He’s having an enormously positive impact on the company. And 3) We’ve extended our relationships with Microsoft beyond the technical community, and begun to gain significant mindshare among Microsoft’s sales and marketing organizations.
Sterling Hoffman: How has your role as CEO changed over the last 2 years? How much of that change is due to Groove’s natural evolution, and how much of it is due to the state of the market?
Ray Ozzie: My role has definitely changed. The first few years while we were developing Groove, I was largely inwardly focused. Although I didn’t code, I spent a great deal defining the design and architecture of the product. In the past couple of years, I’ve been far more outwardly focused, communicating our value proposition to customers, prospects, analysts, and the press, among others. This transition really has been in line with the evolution of the company from a technology-driven to a customer-driven organization.
Sterling Hoffman: What’s changed in terms of strategy in 2002, relative to 3 years ago?
Ray Ozzie: The strategy is always evolving, as is the product as we prioritize development based upon market feedback. Three yeas ago, we were still in stealth mode, and still focused solely on developing the product. Today, we now have Groove Workspace 2.0 in the market and our direct sales force is focused on selling to line of business managers within Fortune 1000 companies who recognize that email is an ineffective and insecure tool for working with others on various business processes both within and beyond company boundaries. We launched Groove Workspace 2.0 in mid April and began selling the product to small businesses and individuals from our Web site. We’ve been pleased with the rate of sales to date and feel that this channel will be successful for us as well.
Angel Mehta is a Managing Director at Sterling-Hoffman, a retained executive search firm that represents venture capital firms and enterprise software companies in VP Sales, VP Marketing, and C-Level recruitment projects. He can be reached via email at: amehta@sterlinghoffman.net.
 
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