Here's What Salesforce Paid for Rypple, and Who Got Beat For the Deal...

At the time of the deal for Salesforce to acquire Rypple, I wrote this post related to why it made sense to me.  At the time, there wasn't any info on what Salesforce paid for the company, and a couple of Google searches show little info out there now on the specs.  So let's share!

Fortune reports in this article accompanying their "Best Places to Work" issue that Salesforce paid $60 Million to acquire Rypple, that SuccessFactors had a higher bid in play, but Rypple decided to take less to go with overall culture and "fit".  More from Fortune:

"It took a Reuben sandwich and Dr. Brown's Cream Soda to close the deal.

Nobody's as good at salesmanship in the world of high tech as Marc Benioff, the nimble and gregarious 6-foot-5, 290-pound co-founder and CEO of Salesforce.com. A few months ago, his burgeoning company -- the San Francisco-based powerhouse in cloud computing for businesses -- was looking to buy Rypple, a startup in Toronto that specializes in human resources apps. The two companies had already had several rounds of discussions. In late October, the 47-year-old Benioff was in Manhattan to speak before the G100 conference of executives. So were Daniel Debow and David Stein, the 38-year-old co-founders of Rypple.

The night before, Benioff took them to San Pietro, the Midtown Italian restaurant where he holds court every time he's in town: "Right over there is where I sent my favorite California Cabernet to King Abdullah of Jordan -- to say thank you for helping to build peace in the Middle East!" And the king was so impressed he sent his bodyguards back to the hotel "to bring me one of his famous beautiful watches!" Benioff has told the tale so many times at the restaurant that the waiters can recite it. He made sure that Stein, a wine buff, got the same bottle of Dalla Valle as the king.

After attending G100 events the next day, Benioff suggested that he and Debow hit the renowned 2nd Avenue Deli for lunch. (Stein had to go back home.) There weren't any tables, so Benioff got them seats at the corner of the counter. And he ordered up the full array: corned beef, sauerkraut, and melted Swiss on rye, with lots of dressing; matzoh ball soup; chopped liver; chased with warm assorted rugelach. They didn't talk business. "We just kibitzed," Debow says. Soon thereafter, Rypple took Salesforce's $60 million, turning down a richer offer -- from SuccessFactors, which was just bought by SAP, one of Salesforce's archrivals. "It wasn't only about deal terms, but corporate culture," Debow says. "We barely met the other CEO." Debow says he sensed Benioff was the kind of person "we could deliver our company and employees to … that we entrepreneurs could be part of their family. Nobody can keep up the artifice over a couple hours of sharing pickles."

Personal attention and cultural fit made Rypple take less and go with Salesforce?  Bravo and a cautionary tale for the value of C-level involvement in many things.  Congrads again to Rypple and Salesforce.  

Your Employees Are Fat - Blame the Wal-Mart Supercenter...

Of course, I don't believe that, but it's interesting to consider the blame game that always seems to land at the front steps of Wal-Mart.  From research entitled "Supersizing Supercenters? The Impact of Wal-Mart Supercenters on Body Mass Index and Obesity":

"Researchers have linked the rise in obesity to technological progress reducing the opportunity cost of food consumption and increasing the opportunity cost of physical activity. We examine this hypothesis in the context of Walmart Supercenters, whose advancements in retail logistics have translated to substantial reductions in the prices of food and other consumer goods. Using data from the Behavioral Risk Factor Surveillance System matched with Walmart Supercenter entry dates and locations, we examine the effects of Supercenters on body mass index (BMI) and obesity. We account for the endogeneity of Walmart Supercenter locations with an instrumental variables approach that exploits the unique geographical pattern of Supercenter expansion around Walmart’s headquarters in Bentonville, Arkansas.

An additional Supercenter per 100,000 residents increases average BMI by 0.24 units and the obesity rate by 2.3 percentage points. These results imply that the proliferation of Walmart Supercenters explains 10.5% of the rise in obesity since the late 1980s, but the resulting increase in medical expenditures offsets only a small portion of consumers’ savings from shopping at Supercenters."

So Wal-Mart comes with cheap food and we get fat.  Somebody else is to blame, but your self-insured Medical plan is the one that has to pay.  What's that?  You're thinking about putting in discounts to employee contributions for healthcare for people who live healthy?  Watch yourself, Spartan - there's plenty of legislation out there that prevents you from doing anything (Hi GINA!) that will actually change behavior.

I've got an idea.  Buy foods with less fat and work out 3-4 times a week. The low fat foods at Wal-Mart are cheaper too.  How about that?

HR MBA: At Groupon, You Have to be a Little Insensitive to do Market Share Hiring...

OK Kids - let's roll out a little HR MBA lesson courtesy of hot daily deal/venture capital play Groupon. You don't have any reason to know this, but Groupon is the poster child for the daily deal segment and is growing like gangbusters.  Growth that can only be described as "market share capture".  Why do we call it that?  They're hiring sales people out the wazzo, and in doing so, they've gone from break even to losing 102 million a quarter in 2 Years.

Look up "market share capture" and "market share hiring" in wikipedia and it should have the Groupon logo there.  More from TechCrunch:

"Daily deals juggernaut Groupon managed to significantly slash marketing costs last quarter, but its net loss in the second quarter of this year has almost tripled compared to last year as it hired more than 1,000 new employees, according to an SEC filing published this morning. Basically, the company is still growing like gangbustersbut losing money like crazy in the process.

The updated financial details show that Groupon increased revenue from $3.3 million in Q2 2009 to $878 million in the second quarter of 2011, while net income swung from $21,000 for the second quarter of 2009 to a staggering net loss of $102.7 million for the second quarter of 2011.

The reported net loss is in line with the first quarter of 2011 but nearly triple the $36 million loss from Q2 2010. Groupon hired more than 1,000 employees in the 3-month period – growing its sales force to more than 4,800 people – which caused a serious bump in ‘general and administrative expenses’.

In total, Groupon grew from 37 employees as of June 2009 to 9,625 employees as of June 2011.

Groupon serves 175 North American markets and 45 countries as of June 30, 2011. The company accounted for 115.7 million subscribers at the end of the second quarter of 2011 and says over 23 million customers have purchased Groupons through the end of Q2 2011."

But wait!  There's more fun and games to the Groupon hiring story.  Sure, they're hiring lots of people in a market share drive, but - revenue per merchant and deal size is actually going DOWN.  Check out this chart:

Your HR MBA mission: Sell the promise of Groupon but forget to tell your candidates that deal size and revenue per merchant is down. More from Silicon Alley Insider:

"Groupon's business faces significant challenges as competition becomes more intense according to an analysis by Vin Vacanti of deals aggregator Yipit.

Vacanti took a look at the latest S1 numbers on Groupon's Boston business, which is its second oldest market. It's good to look at a mature market like Boston because it could be provide a window into what will happen elsewhere in the world when the competition catches up.

On the face of it, things look good in Boston. The number of subscribers was up for the second quarter of the year versus the first quarter. Revenue was up on a quarter over quarter basis. Featured merchants grew as well.

But beneath these numbers lies a troubling trend, according to Vacanti. Groupons sold per subscriber was down. And revenue per merchant was down as well. These two metrics suggest that Groupon's bottom line is in trouble.

Vacanti summarizes his analysis by saying, "Groupon is spending considerable money to acquire subscribers but those subscribers are buying less Groupons. Groupon is also spending considerable money to acquire merchants but are making less revenue per merchant. That’s not good."

HR MBA lesson: Market share hiring means you don't worry about whether the business can support the people you're hiring.  You hire revenue producers knowing that they'll either sell, or by the very nature of sales performance management - they're gone.

It's not your problem.  Fingers crossed at Groupon as they hire those 1,000 sales pros based on the numbers above.  Go read it again - HR MBA for those who take the time...

4 Reasons Google Doesn't Have to Fix Pay Issues In The Motorola Acquisition...

You may have seen this - Google bought the mobile business of Motorola for 12.5 Billion last week, and one of the things that has come up is a sizable gap in the pay of software engineers between the two companies.  See the chart at the right from Business Insider...

So, the first thing the inexperienced HR Pro would do is start hyperventilating.  A 40K difference? Summon the comp experts!  We've got to fix it!

Hold up.  You don't have to fix it.  Here's why:

1.  The company with the larger average salary is the one doing the acquiring.  This automatically takes the pressure off of this pay gap in the transition.  If it were the other way around and you had Google folks starting to collaborate with the new guys, and they found out the NEW GUYS earned 40K more a year, there would be hell to pay.  Doesn't work the other way around.

2.  Physical proximity is distant.  San Fran vs. Chicago.  That space reduces the pressure as well.  Geographical slotting from a comp perspective are at play for sure.

3.  Google intends to run the acquired unit as a seperate company.  More pressure release.

4.  AND THE BIGGEST REASON YOU DON'T HAVE TO WORRY ABOUT THE GAP:  The jobs aren't the same.  Google code jockies change the world with web based products, starting with search, then moving through all the other products/services they're developing.  Motorola code jockeys develop software for phones.  I'm not saying the gap needs to be that high, but it's not the same job.

Plug those four factors into any salary issue as a result of an acquisition to figure out what to do next. Turns out, all of them favor Google in this scenario, which means they have years, not months, to deal with this comp perception issue.

 

It's No Fun Being an Illegal Alien...

Today's post is a pointer to a great post from Dawn Burke over at Fistful of Talent, where DHB is ranting a bit about the new tough immigration law that's on the books in 'Bama.  Doesn't really matter whether you watch Fox News or MSNBC, you probably don't know everything you need to know about the law, like this gem from DHB:

"All businesses over 25 employees must use e-verify.  If they do not, then with three violations your business will be permanently closed.  If e-verify cannot confirm the status of the applicant and within 8 days the employee contests the findings, you cannot take adverse action on that employee until e-verify can confirm.  This could take months."

That got your attention, eh?  Jump over and read the whole post.

While we're on the subject of illegal aliens, tell me if these lyrics ring true:

"Got out of bed, wasn't feeling too good
With my wallet and my passport, a new pair of shoes
The sun is shining so I head for the park
With a bottle of tequila, and a new pack of cigarettes

I got a cousin and she got a friend
Who thought that her aunt knew a man who could help
At his apartment I knocked on the door
He wouldn't come out until he got paid

Now don't tell anybody what I wanna do
If they find out you know that they'll never let me through, 'cos

It's no fun being an illegal alien, no
It's no fun being an illegal alien"

If you're over 35, you know that song: Illegal Alien by Genesis.  If '83 is your birthdate, watch the video and join the Gen X'ers after the jump below.

What did we learn from that video?  Here are my notes:

1. Lip syncing production values have come a long way.  Phil Collins and the boys did this in two takes, max.

2. Our sensitivty towards our friends from the South has changed over the years.  They'd be trying to put Genesis in jail right now for this video, but of course, Genesis would argue that they're really getting attention for the plight of the immigrant worker.  Even if one of the secondary members of the band just wanted to wear sunglasses and a mustache.

3. I spent way too much time watching "Friday Night Videos" on USA.  Don't act like you don't know.  If you're 35 or over, you know.

Read Dawn's post.  And watch this video.

Your Future HR MBOs Will Include Hiring At Least 1,000 Robots....

A while back I asked the question whether it was your job (HR's job) to find the lowest cost labor for your company to run on, including offshoring work to other countries when it makes sense.  I think it probably is your job - workforce planning, best/worst - depending on your perspective.  It sucks, I know - but if you don't do it when it makes sense, then someone's going to do it for you.

So, it's your job to find the lowest cost labor at the same quality.  By the way, in the future, that labor sourcing will include ROBOTS...

My good friend, Steve Boese, over at Steve's HR Technology Blog (aptly named, I might add) recently wrote about an article from TechCrunch that highlighted the fact that Foxconn, a huge supplier of all the electronics you use (iPhone - check, iPad - check) is moving out the manual labor in China and replacing it with Robots.  No joke - the economics of manual labor in China started not working as well as wages and costs invariably have risen.  Crazy stuff...

More from TechCrunch:

"Foxconn is planning on replacing many of its hard-working human manufacturers with about 1 million robots, a number that, if you think about it, is a very telling comment on the current state of electronics manufacturing.

There are apparently 10,000 robots at the factory now and that number will increase by 300,000 next year. Foxconn CEO Terry Gou plans another million robots by 2014. The company currently employs 1.2 million humans.

The most important thing to note here is that most of the repetitive tasks associated with manufacturing – placing components, closing cases, applying decals and paint, and testing – are all done by hand. Although we imagine that the manufacturing industry is run by huge, Transformer-like robots that plop out fully formed iPads in a wicked silicon satire of human reproduction, there are actual people involved in almost every step of the process. We are literally not far off from the Industrial Revolution here."

No robots to 1M robots at this company in 3 years.  Think about that... Everyone gets pissed off when jobs get offshored to places like China.  Now, jobs in China aren't even getting offshored to the next low-cost location - they're just plugging in robots to take over for the labor that humans provided. Which begs the question, when does production come back to the states because we can do similar type production onshore and avoid the shipping costs?  Answer - as soon as the total investment cost makes sense and we can save a dollar when we spread the capital investment costs out over a 5-year period.

So back to the question - is it your job to find the lowest cost labor for your company to run on (at the same quality), including robots?

It is - and it sucks for a huge portion of the workforce in the States that needs retraining to compete as the definition of the labor market changes.

That robotics track at the local technical school should be looking pretty tasty to anyone out of a production job who stumbles upon this TechCrunch article.

What It Takes to Get an MBA These Days...

Thinking about college recruiting today, which led me to the following infographic from MasterDegreeOnline.

Enjoy and think about the ROI.  Lots of ways to slice this...

5 Things HR Pros Can Learn From the 2011 Netflix Pricing Changes...

Raise your hand if you're pissed off about the Netflix price hike...

Many of you are, others of you have no idea what I'm talking about.  You undoubtedly know who Netflix is - they're the people who killed the local video store - Blockbuster, et al - by changing the game.  Instead of having costly retail space, Netflix originally provided videos through mail order - you paid a monthly fee, then you could rent a movie that would be mailed to you, then you mailed it back to get another movie sent to you based on what you had reserved.  All you can eat, you just have to get it back in the mail. Brilliant.

Netflix always innovates.  One thing they've spent a lot of time on is the ability to "stream" portions of their video library - taking advantage of the broadband connections in most homes and the tech savvy nature of their customers. The move to streaming would help make the business more profitable - mailing out all those DVDs isn't cheap, it turns out...

So, onto the recent news - Netflix announced a pricing change in July 2011 - here's the rundown of the details from TechCrunch:

"Netflix is officially on an all-out assault on the DVD — or so says their just-released pricing strategy. The new prices yell loud and clear that streaming is the future and you’re going to pay (literally) if you don’t hop on the bandwagon. Maybe this is why Reed Hastings stated back in May that DVD shipments might go down for the first time ever.

Gone are the plans that include streaming and DVD. Customers previously had the option of selecting the streaming plan for $7.99 and then paying an additional $2 to be able to rent one DVD at a time. Now the plans are separate with the streaming plan costing $7.99 and the DVD plan at $7.99; selecting both options for $16 results in a 60% price increase. Current subscribers will be able to ride the lower price until September 1st, but the plan just went live for new customers. Ouch."

The reaction among Netflix customers was ugly:

"And, as you may have heard, customers were not happy. No, they were not happy at all. In fact, on the blog post in which Netflix announced said pricing changes, over 12,000 comments were posted (and that’s using Facebook’s commenting system, something TechCrunch readers are unhappily familiar with), most of them angry, and many in turn did their own announcing, saying they would be tendering their resignations, effective immediately.

Of course, but, so what? Well, according to YouGov’s BrandIndex, in the ten days since Netflixmade its price changes, the national perception of Netflix’s brand among adults dropped precipitously from a 39.1 on July 12th to -14.1 on July 18th, and currently sits at -6, putting Netflixin a virtual tie with Blockbuster. With a margin error of 5, that’s no tiny aberration."

So what's it all mean?  What can you learn from the Netflix pricing change as an HR Pro?  I think the following 4 things:

1. Costs and margins matter.  Don't kid yourself.  If you believe you can migrate the customer to a similar product but a cheaper delivery platform and you choose not to do it because you're scared of the blowback (from employees in your case), you're going to run the risk of having an operator make the call for you.  Put on your big boy/girl pants and make the call.  It's called business, and you have to participate.

2. Take all the pain at once.  If you're making a move that's going to be seen as negative, ask yourself the following question: "What do we need to include in this organizational change, so we get as much of the change out of the way with this single announcement as possible?"  Don't do 2-3 change announcements if you can do it all in one package.

3. Communicate why you're doing it.  Why?  What's the goal?  Does it make the organization more stable as a result?  Sell the reasons - or get judged without your voice present.  Netflix didn't do this - their move was designed to drive people away from the costly DVD model or make them pay dearly for it - and they didn't say that.  You can do better.

4. Consider grandfathered tiers in the change. Can you make the change effective with new employees and protect grandfathered status for existing employees?  May not be the right thing in your situation, but certainly a damage control mechanism (if the math works out) that you should consider.

Blowback happens.  Take the time to read through the Netflix pricing situation and the resulting uproar from customers and ask yourself - what would you do differently if you had to migrate all of your employees to a consumer-based health plan in January?

It's your business, and the issues at play are the same for a VP of HR as they are for the CEO of Netflix.

Here's the Money Quote of the Day to Impress Your CFO (or Friends In Finance)...

Don't act like you don't need it, HR.  You want me on this wall, you NEED me on this wall.

Here's a quote to get your friends in Finance chuckling and then quoting something you said repeatedly on and off for the next year:

"Costs are like fingernails.  They grow organically and must be cut regularly."

Boom.  You're welcome.

Quote comes to you from my travels this week, from an organization that - let's just say - values fiscal responsibility...

You think it sounds hokey?  That's OK, use it playfully (I'd use it in the voice of Carl from Caddyshack) to lighten the mood so the Finance folks don't think you're taking yourself too seriously.

Deliver this one right, and they'll quote you - HR - often.  That seems like a good place to be with kids from Finance.

Digital Content Slaves/OffShoring/1099s: Is It HR's Job To Find the Cheapest Labor for the Same Quality?

Note to the kids in HR: If you really want to move up the ladder, you're eventually going to find yourself asking the following two questions:

"Is It My Job To Find the Cheapest Labor for the Same Quality?"

"Is it My Job To Do That Before I'm Asked?"

Welcome to the show kids, where the curveballs come at your head before they break off for a stike.  You think being ethical means treating people fairly.  You're half right.  Your board thinks it also means finding the cheapest labor available for equivalent quality.

That might mean your workforce now.  It might mean India.  Might mean South Carolina.  Might mean an army of 1099s.

Depends on your business.  Don't hate the player.  

Case in point: Journalism, especially as it moves online.  More from an AOL Content Slave from The Faster Times:

"I got the job through a friend. The job was this: I would write about TV for a section of the AOL Television website. In theory, this sounded great. In exchange for writing about “The Simpsons” and other TV shows, I would be making $35,000 a year (which sounded like a shockingly large amount of money to me at the time; and sadly, it still does). I performed this job for less than a year before I was fired. During that period, I wrote more than 350,000 words for AOL.

I was given eight to ten article assignments a night, writing about television shows that I had never seen before. AOL would send me short video clips, ranging from one-to-two minutes in length — clips from “Law & Order,” “Family Guy,” “Dancing With the Stars,” the Grammys, and so on and so forth… My job was then to write about them. But really, my job was to lie. My job was to write about random, out-of-context video clips, while pretending to the reader that I had watched the actual show in question. AOL knew I hadn’t watched the show. The rate at which they would send me clips and then expect articles about them made it impossible to watch all the shows — or to watch any of them, really.

That alone was unethical. But what happened next was painful. My “ideal” turn-around time to produce a column started at thirty-five minutes, then was gradually reduced to half an hour, then twenty-five minutes. Twenty-five minutes to research and write about a show I had never seen — and this twenty-five minute period  included time for formatting the article in the AOL blogging system, and choosing and editing a photograph for the article. Errors were inevitably the result.  But errors didn’t matter; or rather, they didn’t matter for my bosses.

I still have a saved IM conversation with my boss, written after 10 months of employment, when I was reaching the breaking point:

“Do you guys even CARE what I write? Does it make any difference if it’s good or bad?” I said.

“Not really,” was the reply."

Go check out the article; it's a fascinating read and should make you throw up, even if just a little bit. Supply and demand, availability of labor, etc.  What's your job in all of this, HR?  When I say HR in this case, I mean the SVP of HR helping AOL figure this one out.

Hire traditional staff or go after the 1099 labor situation described above?

I don't know.  I do know, however, that the people who run your company expect you to ask the questions we led with - proactively, without being asked.

Scary times.  Be the best to avoid becoming a freelancer.