Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

{audio:0:02:56} I'm a big fan of Google and Workspace but it's the area of the business I understand the least. I'm interested in your perspective and experience, and a good place to start is what your responsibilities were when you got to Workspace and we can go from there?

{audio:0:03:44} I was with Workspace for 2.5 years from 2019 until I left last year. The first year was to set up and run a new go-to-market team focused on selling a new SKU called Google Drive Enterprise. After that, I moved into strategy and operations for Workspace, reporting to the chief of staff general manager at the time, Javier Soltero. Javier reported into Thomas Kurian who was the CEO of Cloud. My responsibilities were product strategy, which is what product development should happen and why. One of my first projects was to launch Workspace. My small but mighty team worked with the product management team on product decision components such as Meet, Drive and Gmail.

{audio:0:05:15} You have the exact perspective I'm looking for. I would love perspective and fluency in how Workspace thinks about its strategy, given their giant competitor. I imagine this has to do with counter positioning against Microsoft 365; what is the essence of Workspace's role in the market?

{audio:0:06:02} I will give you a quick one-minute history then move to where it is heading. Google Apps was the first form of what is now Google Workspace, the idea being to disrupt Microsoft with something that will help businesses. It began as a free offering which was crazy, then moved into Google for Enterprises and G Suite, the last iteration before Workspace. The idea is for end users to benefit from better tools and solutions. Gmail significantly disrupted Hotmail and Outlook in the consumer market, so there was no reason why all the other tools could not do the same in the enterprise market. It's not only a competitive outlook towards Microsoft; there's a strong inherent value-driven idea they have a better solution that can be used to serve customers in the end.

{audio:0:07:11} What are the themes and the inroads for better?

{audio:0:07:20} If you look at enterprise and consumer software, there's a huge delta in terms of the importance give to end user capabilities and security. In all scenarios, Google believes Workspace and its inherent components are better for both the end user and enterprise. Microsoft handles folder storage and document management based on SharePoint, which is awful and hasn't gotten better. They put a mask on top of it in the form of Microsoft Teams, which organizes everything behind the chat interface and tries to build on top of it. They did a great job of that but never translated it to mail, Teams Video Chat and their other solutions. 

Google tackles that by making enterprise software as good as consumer software from an end user standpoint. That includes security because the zero-trust revolution happened from hacking a Microsoft Surface. The way they countered it was to sell the highest possible SKU to the same people who were affected by the hack. Google has the opposite view that everything is secure by default. The problem Google faces is making it administratively easier to use, with similar bells and whistles a Microsoft or Oracle administrator is comfortable with. They're actively working towards solving those problems with Workspace.

{audio:0:09:43} Workspace has native multi-user collaboration; is that a key pillar of their strategy and is it a sustainable advantage?

{audio:0:10:13} It's definitely a key pillar of the strategy and it's within the company DNA. We came out with a Hub strategy which is a singular convergence similar to the telecom industry. Chat, video and mail converges into a singular user experience, even if it's not a singular user interface. There's multiple reasons why that is better and that is definitely how Workspace will succeed in future. Whether it is sustainable will be answered over time. Teams has shown that Microsoft can play and compete, so it's not a single horse race between who is more collaborative. The differences are still large. Teams is a good wallpaper on a wall with foundational issues, and we will see how much they can solve while the wallpaper sheen remains.

{audio:0:11:34} When Adobe acquired Figma, one of the arguments I came across was having legacy file-based architecture made it hard to move to multi-user collaboration; do you think migrating legacy users is a challenge for Microsoft?

{audio:0:12:18} A major challenge is retraining someone in a new interface, which is huge. There is also a huge cost for their customers to move that user over, and more of them are not looking for the five-year tie-in to a huge multi-product contract, which is true. Their third challenge is how quickly they can re-architect the back-end processes to make it collaborative, and can they do that while customers are exploring Workspace and other solutions like Slack. You see stark differences between Microsoft solutions and any true cloud solution as soon as you start looking at the other solutions. It's not a competitive edge that Microsoft can stand behind unless they make some serious changes in the next two to three years, which I know they're trying to do.

{audio:0:13:29} If you handicapped the probability of them overcoming those challenges in the next three years, would you put it at 50/50 or are you more opinionated than that?

{audio:0:13:47} They will not overcome the technical challenges in the next three years, but they might be able to do enough to retain their customers and grow that base.

{audio:0:14:02} The key pillars of their Workspace strategy we've covered so far are product, security and multi-user collaboration, are there others?

{audio:0:14:27} The other pillar is that it is cheaper to use Workspace.

{audio:0:14:39} Is that by taking advantage of a pricing umbrella?

{audio:0:14:45} Enterprise Plus is the costliest Workspace solution, and is closer to the newer E5 Microsoft pricing plan than the older M5 plan, the difference being 60%.

{audio:0:15:17} Who is the natural customer for Workspace versus Microsoft? The answer is obvious but I'd love to get the nuance. A second question is, are there proof points of true enterprises doing wall to wall Workspace without Microsoft?

{audio:0:15:59} In terms of the classic mix of customers for Workspace versus Microsoft, Workspace is heavier on the SMB side than enterprise, and Microsoft is the opposite. There's a much stronger flywheel that works well for Workspace for the SMB side. An interesting anecdote is the evolution of that from an enterprise standpoint. Workspace is now doing well with government entities and manufacturing who work in regulated industries where the security by default stance is attractive. Zero trust is baked into what Google does in general. For the longest time, Microsoft was the only player in that market, so they've been actively looking for competitive products to hedge towards and work against Microsoft on. Choice is good; they want to give people the latest thing. They want to attract new talent but not retrain them for a year on archaic capabilities they have never used, and get them to be productive. 

{audio:0:17:33} The other part is pricing pressure because Microsoft ups the cost every year on every contract, and nobody wants to pay that much. Google is a huge player they can trust, as opposed to a fly-by-night operation. The DOD recently signed with Workspace which was a huge contract. More manufacturers who serve government entities will move to Google, that momentum can only grow and that is the right set to target from an enterprise standpoint. Google's native capability has always been digital natives and retail, but this set is a lot more sustainable. Pricing pressure is not that strong once established, which is a huge advantage when working in regulated industries.

{audio:0:18:30} Are we seeing true wall to walls in enterprises?

{audio:0:18:41} There are a few examples of true wall to walls outside regulated industries. Those include medium sized businesses and digital natives, such as Stripe or Block, who started off in this digital age and are 100% on Google. They only use Microsoft when they have to work with a client who insists on it as a vendor. In other cases, pockets of different installations and use cases will always exist. Every company works with 34 SaaS providers, so it's not going away any time soon.

{audio:0:19:39} Is coexistence in big companies in equilibrium or will there be a reckoning?

{audio:0:19:52} Pockets of use will continue in different organizations because Microsoft has a larger and better tool set than Google. They have a bunch of things nobody uses, but if the finance team needs it, you have to continue allowing them to use it. That gap will take longer but small team deployments across both solutions will be the norm.

{audio:0:20:27} Did it feel like the strategy was working internally and all you had to do was methodically execute for the vision you started out with to be achievable, or was it a struggle and a wayward enterprise? Where on that spectrum did it feel?

{audio:0:21:10} It started off feeling wayward but towards the end it felt like it landed, thanks to Thomas Kurian coming in. He has one of the strongest execution mindsets in a CEO I've seen in a long time. It's not easy to work for him, but it is obvious why he is where he is, so that remains strong. With G-Suite, we had three SKUs and an enterprise like Airbus could purchase the lowest SKU possible and stay on it forever and nobody would have a good way to execute them up the chain. That was solved by Workspace, largely due to both Thomas and Javier needing that change to happen, so the ship is righted where it should be. It's a huge part of cloud's growth from a net bottom line standpoint so it is a sustainable advantage. It's also a good business to be in so they will continue with it. There is no good way to decouple the consumer business, which Google will never abandon, and the enterprise business which cloud won't abandon. This business has to succeed so it has huge backing inside Google.

{audio:0:22:45} People question whether any one of these things is sustainable, but it is so mission critical to tens of millions of people that I don't understand how it could stop. Should I think about GCP and Workspace as inseparable businesses or standalone?

{audio:0:23:18} We could decouple them but there are economies of scale in the selling and end user customer processes that it would make no sense. The huge stores of data that exist on Workspace or Drive can be used to run machine learning algorithms for customers. They would void a huge amount of synergy by decoupling the businesses.

{audio:0:24:06} How effective is their go-to-market in bringing the best of GCP and Workspace and leveraging the fact they are currently sold together?

{audio:0:24:27} More work is required as most sellers are used to selling GCP workloads as opposed to SaaS. They currently have vertical teams who work across a customer base and horizontal teams who are product specialists and would work on Workspace. They would, essentially, become part of the vertical teams. They have horizontal Workspace specialists who work with manufacturing, financials or healthcare. Those are the required changes they are making to make their go-to-market work well. An advantage Microsoft has because they had time to evolve it, is that every seller is re-certified on a quarterly basis. Education, re-education and inoculation is a strong part of Microsoft's go-to-market culture whereas Google is still building that up and needs to improve. I would think of it as a short-term issue which needs to be solved.

{audio:0:25:46} Are there any important long-term issues that Google might not solve?

{audio:0:25:58} Clarity at the top of the chain will always be an issue because five people have run this product suite over the past four years. With Javier, it was stable for three years and he was the right person to make the change. Aparna now runs Workspace and is an engineering-focused leader who is critically important for the organization. That and continued product innovation are reasons for success. Each year, they make incremental changes but it's time they made several big decisions and stuck to them. An example is, is their focus on hardware or not? Make that decision and run with it. Thomas Kurian has a strong point of view and that will continue in that organization, which is a good thing, as he is pivotal to the success of both Cloud and Workspace. The other issue is how competition will evolve. The round of tech changes in the larger ecosphere will be interesting because many solutions are currently up for sale. Some might be purchased by Salesforce or Microsoft, and Zoom doesn't have a good future. Those changes will dictate which adjacent markets Google can grow into and become a stronger offering. The decisions they make around that will be interesting to see.

{audio:0:28:04} Which key solutions or categories are you referring to?

{audio:0:28:10} Microsoft Power BI will be tough to shake in the area of analytics, which Google currently has no answer to. They have many products which could become the answer, but the decision hasn't been made. Looker exists and they purchased several analytics scripts and app sheets, the integration of which into the suite and how that is packaged and sold will make a big difference. Project management is another area, and a space which I am currently involved in, so that is a huge frontier for folks.

{audio:0:28:53} I'm a Monday shareholder so I know about that space. Salesforce and Google are natural allies in many ways; is there a way for them to work together?

{audio:0:29:30} They have tried to do that and there is definitely affinity between the two companies, but the execution of a joint scalable go-to-market remains a dream. There is not enough alignment of incentives across the teams to make it happen yet.

{audio:0:29:55} How does your experience of two pizza single-threaded teams compare to what outsiders observe?

{audio:0:30:45} Could you give me a one-minute overview of your outsider observation?

{audio:0:30:51} Bezos is credited with inventing the two-pizza team, and many flavors exist. Amazon discovered being single-threaded is more important than team size. Spotify have squads which are harmonized at larger layers. Small teams that are autonomous by default are the most effective structure, but how does that manifest at Google?

{audio:0:31:33} Google tried that for a long time, which is why we had seven different chat products working against each other. So much of Google is consumer-focused, that they end up solving the same problem in two different ways, because enterprise is also solving it with their specific lens. Having a matrix organization, working on a singular sector of offerings, helps reduce overhead and true duplication which shouldn't exist. Google stumbled its way into this organizational structure which works well for them. Financially, it has shown it bears more fruit than it reserves, but it doesn't always work well in other companies. Amazon is definitely not the same.

{audio:0:32:38} My main lesson from studying these companies is different things can work. How data-driven is Google in their decision making?

{audio:0:32:52} They are very data-driven compared to other companies I've worked with. Google does a lot of work based on core data and decisions are often made only on the basis of data. You cannot go in with a hunch; you have to prove it by being confident in the data. When I was on the non-cloud side of the house, you couldn't meet with a VP without your data ready, and on the cloud side you couldn't schedule an executive meeting without sending the data and having a conversation about it days before.

{audio:0:33:47} How good is Google at dealing with times when the data tells you something contrary to what you believed in?

{audio:0:34:00} We made mistakes where the data said one thing and we did the opposite, because a strong-minded executive or senior leader wanted to do it. It's never science but if we believe the data says one thing versus the other, we have to prove the data is incomplete and further market studies need to be done, which is also an oxymoron.

{audio:0:34:48} Can the effectiveness of the data drivenness be improved?

{audio:0:35:04} The good thing is, decisions that are made are incredibly good. The not so good thing is that strong decisions take longer to make, which is evident in what the industry thinks of Sundar; he takes a long time to make a decisive move, but the move is always a good one. At least, that has proven to be the case so far. 

Google Workspace vs Microsoft 365

Former Strategy Executive at Google Workspace

inpractise.com/articles/google-workspace-security-enterprises-and-synergies-w-gcp

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Former Strategy Executive at Google Workspace

Interview Transcript

What are the themes and the inroads for better?

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Google Workspace vs Microsoft 365(February 6, 2023)

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