Disruptor | Zach Nelson, CEO, NetSuite

The self-admitted micromanager believes in codifying almost every corporate process so his teams can focus on making informed decisions.
Written by Heather Clancy, Contributor on

For someone who has spent most of his career branding and selling technology, not actually developing it, long-time NetSuite CEO Zach Nelson sure is fond of codification. It's a word he comfortably uses as both noun and verb no fewer than five times during our 40-minute telephone interview.

Then again, Nelson is the first marketing executive I've met in the past 25 years who holds a software patent. What's more, it's one that actually is relevant for his job -- covering a method for integrating software applications and codifying them into a single architecture, which just happens to be one of NetSuite's core value propositions. "You have to have confidence in your system," he explains. "I think that's an important touchstone for every CEO."

With his close-cut salt-and-pepper hair, neatly trimmed beard and minimalist wire frame glasses, Nelson, 52, isn't ashamed of his tendency to micromanage. But it's something that is becoming super hard to pull off at his fast-growing business management software company -- which will almost double in headcount this year.

"In the early days of running a startup, you have your hand on every dial," he says. "You know what's going on in sales, in detail. You know what's going on in service, in detail; what's going on in support, in detail. The challenging part as you get bigger is you have your hands on the dials, but you can't have as much knowledge as you used to have, down to the front-line level ... At some point, that becomes a little uncomfortable, because -- in my case -- you're used to micromanaging. That's sort of what you do in the early days of an organization. You have to surround yourself with people that you believe can take the burden of micromanaging, the way you used to micromanage the whole company."

This expresses itself across NetSuite's human resource processes. Want a sales or customer service job? Be prepared to take a personality test, which will show whether (or not) you fit the profile Nelson's team developed based on NetSuite's most successful employees in these roles. If you're the final candidate for one of those jobs, your offer will invariably land on his desk for review. Due for an annual performance appraisal and maybe a raise? Get ready to prove how you've delivered on the company's core values, especially this one: "we take the hill."

When Nelson joined the cloud software provider in 2002 -- an era when the word cloud had little relevance outside weather discussions -- NetSuite reported a modest $1 million in sales for its suite of SMB business management applications. Over his 11 years with the company (an admirably long tenure for a non-founder Silicon Valley startup CEO), he has presided over a name change (NetSuite's original moniker was NetLedger), an initial public offering (in 2007) and a veritable explosion in hiring. As the company pushes above $400 million in anticipated sales this year, NetSuite will hire an estimated 1,000 employees, pushing total headcount to around 2,500.

Put another way, that's the equivalent of hiring at least three people daily, every day of the year. That rapid pace required a complete overhaul of the NetSuite's recruiting practices: it now uses recruiters to winnow most positions down to two candidate before the hiring manager gets directly involved. That way, people can actually do their jobs while they're filling the open positions, he says.

Nelson actually used to review every job offer NetSuite made, a practice he picked up from former boss Larry Ellison, the billionaire Oracle CEO and one of NetSuite's co-founders. Although that is no longer feasible, Nelson remains involved with sales and services candidates to keep a pulse on those customer-facing operations. "It gives you some opportunity to course-correct mid-year, mid-plan," he says. "In addition to being able to understand who the people are that you are bringing on, you're able to think about the plan you're executing and whether you want to continue to do that."

To be fair, Nelson's resume as a marketing executive and general manager at legendary Silicon Valley companies including Oracle, McAfee and Sun Microsystems overlooks his bachelor's degree in biology and master's in anthropology from Stanford University -- the Wayback Machine from the children's cartoon The Rocky and Bullwinkle Show is one of his favorite science fiction gadgets. One of 10 children raised in Nebraska, Nelson jokes that he was the "designated doctor" until he became disillusioned with the profession while running two labs at the veteran's hospital in Palo Alto, prior to starting medical school. "Then I got sucked into the black hole of technology, just based on location," he says, laughing.

In the years before Nelson connected with NetSuite co-founder Evan Goldberg, he famously turned Sun's geeky SunOS Unix operating system into a brand, Solaris, that had appeal across corporate America. At McAfee (formerly Network Associates), he created MyCIO.com, the security software company's initial cloud foray. "Everything in my career pointed to NetSuite ultimately," Nelson recalls. "I just didn't know it until I met Evan."

We've all heard horror stories about startups that have identity crises after their founder steps out of the CEO role. That hasn't happened at NetSuite, where Goldberg acts as chairman, chief technology officer and a moral compass who keeps the team tightly fixed on the company's founding principles.

"Our skill sets are incredibly complementary, it's even down to bizarre personal things," Nelson says. "Evan loves brand-new cars, I just bought a '63 Corvette. It's this sort of flip side of the same coin thing. We have a lot of personality traits that complement the other's skillset very well. The other thing that I think is important, in particular, for NetSuite, is that I'm sort of our target customer. The CEO really, at the end of the day, gets the biggest benefit from NetSuite."

One of Nelson's most trusted advisers is board member Billy Beane, the general manager of the Oakland Athletics baseball team and inspiration for the 2003 book "Moneyball: The Art of Winning an Unfair Game." Beane famously turned to analytics software 10 years ago to make the most of his draft picks versus teams with much bigger player payrolls, assembling an extremely competitive team despite his relatively low budget. Nelson hire him as a board member in 2007 and relies on his insight to steer internal decisions and advance NetSuite's product direction.

It turns out that managing high-performance individuals is a similar process, no matter what sort of "team" you're talk about. "What he did with Moneyball is exactly what our traditional customers have done in that small and medium businesses are the guys trying to take market share from the large enterprise customers that have more money and more resources and all of those things," Nelson says.

Even today, after other teams have copied Beane's idea, few have managed to achieve the same success. The same can be said for companies that make substantial business intelligence investments but fail to realize visible returns from them.

Which brings us back to one of Nelson's core tenets as a manager: it isn't enough to codify, you must be brave enough to take action on what the data reveals, just like Billy Beane. "Philosophically, you can try to emulate what he's doing, but at the end of the day, you have to make the decision … You might think you know what the right thing to do is, but do you have the courage to go do it?"

On the rare occasions that Nelson decides to take a break from those decisions, you might find him bundled up in a quarter-inch wet suit, mask and hoodie, free diving for an abalone dinner off the Pacific coast in Sea Ranch, Calif. The former caddie is also proficient at a seemingly requisite CEO hobby, golf.

But it's more likely that this workaholic is spending his "free time" on some NetSuite problem or opportunity. "There's nothing more fun than to be leading an organization and a company that you believe in, especially if you believe in the people, and you believe in what you're doing for customers," he gushes. "I'd say that my passion is NetSuite. Those other things, if I have time I go do them, but I'd much rather be at work, frankly."

This post was originally published on Smartplanet.com

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