Monday 26 September 2016

The Running Man: David Dempsey and the value of having skin in the game

David Dempsey overcame a potential civil service life sentence to head up Salesforce. He tells Donal Lynch that the trick was to understand that we all start on the same line

Donal Lynch

Published 28/06/2015 | 02:30

David Dempsey: ‘We started as the ankle biter and we’re now a bit like the incumbent’
David Dempsey: ‘We started as the ankle biter and we’re now a bit like the incumbent’

The essayist David Foster Wallace once described TIME as "a magazine, which cannot be contradicted, except by its own subsequent issues". You imagine the leadership of software firm Salesforce must have similar feelings about business bible Forbes.

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The magazine named the Californian computing behemoth as the most innovative company in the world the last five years running - before going with a huge leader this past spring with the headline 'Why Salesforce Is Past Its Best', which in turn was followed by a slew of articles speculating on the various suitors who are thought to want to acquire the company.

The thrust of the criticism was that Salesforce's once revolutionary innovation in offering Software as a Service (SAS) has ossified into an overly rigid business model that risks being left behind by more nimble industry upstarts.

Needless to say, the magazine's praise features prominently on the company's website, whereas the criticism is nowhere to be seen. Which isn't to say that its leadership haven't considered it.

The European side of the business is headed up by doughty Wexford man David Dempsey, who, like the company's San Francisco-based founders, is a former Oracle guy.

"A lot of what was written in Forbes is a reflection of the company being 15 years old," he begins. "We started as the ankle biter and now we have gotten to the stage where we're a bit like the incumbent. But the Forbes article is interesting because innovation never really changed with us. We want to be in the next place before our customers get there."

Of the speculation that someone is about to put in a bid for the company, he says: "There are lots of names being bandied about. There's nothing that I know of, other than what's in the media. As a public company that kind of speculation happens all the time.

The takeover rumours pushed Salesforce's share price up to an all-time high in the US of $78.43 and revenues have grown steadily over the last few years. But the company has remained unprofitable since the fiscal year 2011 and there have been murmurs that its revenue growth has peaked.

"Look, we are a company that continues to innovate and we invest heavily in that", Dempsey says when I bandy about some of these figures. "That's what our customers want from us. Year-on-year Europe grew by about 40pc last year. We've been active in the US for 16 years. We'll look to Europe as the really key driver of future growth. The message has to be nuanced for each territory. Trust is the one thing that transcends countries and markets."

It was an article in another trade paper - Business Week - that brought Dempsey into Salesforce in the first place. He started out his career in the civil service, working for the Post and Telegraphs (P&T) before it became Telecom Eireann, which in turn gave him great experience managing large-scale IT projects.

He spent 11 years with Oracle and, feeling slightly bloodied and battered by the toil of getting bigger Customer Relationship Management (CRM) systems into place on time, he saw an article in BW and decided to jump ship to head up the business for Salesforce in Europe.

"Most people think we're in for the standard reason - the IDA brought us in, and so on. But there are so many factors: Ireland was politically stable, talented and bright people. It was a good stable supporter of foreign direct investment. There were six months of dancing around the handbags before it started. Salesforce started in San Francisco in July of 1999 from an apartment in Telegraph Hill. Marc Benioff [the founder] was an executive in Oracle, but I didn't know him."

For Dempsey it was not an amicable separation from Oracle. "I had to clear all of my stuff into a Cornflake box and someone looked over my shoulder while I did it and my entire career went into that box and, when I left, the door was locked behind me.

"I stood on the street and thought: 'What will I do now?' I went up to Baggot Street and bought three mobile phones, as much to look the part as anything and I put those three phones on my card - they're still three consecutive numbers."

It might have looked like incredible audacity for a self-confessed "yellow belly" and son of a factory worker to take charge of a business like Salesforce in Europe, but he'd learned early in life to think big.

As a youth he was a talented middle-distance runner and won a scholarship to a university in San Diego. The two years he spent there were extremely formative and underpinned his business philosophy thereafter.

"It opened my eyes to the fact that people might come from different backgrounds but they all have to compete in the same way.

"I was just a poor Irish guy and most of the kids were rich. I remember being on the running team and we out for a team meal and they ordered lobster and I didn't even know how to eat it. And for the next few races I always ended up coming last.

"The experience of feeling out of my depth had just made me feel inadequate. I was psyched out completely but I came to understand, that, in running parlance, we all lined up on the same line. And I realised that same idea applied to just about everything. Everyone has an equal chance if they work hard and believe in themselves."

If his ambition was pure, his timing didn't look wonderful to begin with. By now it was 2000 and the dotcom bubble had just burst. Nobody wanted to let an office space to a company that wanted to offer something as nebulous as software as a service.

"We were thrown out of a lot of offices, we couldn't find a space," Dempsey recalls. "We heard that Powerscourt House in Enniskerry had had a fire. The top floor became vacant so we went out there and negotiated that as a premises.

"My office was in one wing and we had all this space in between us with not much there other than ourselves. It gave us a different kind of presence and made us look more substantial than we were. We had a four megabit lease line and we literally had to hire a digger and put our own line in. We needed to get them to send us funds from San Francisco."

His first customer paid him the princely sum of £198 and he was so excited that he framed the cheque.

These days he says that software is thought of by the general public as "the fifth utility" - but 15 years ago it was a different landscape in Ireland and Europe.

"What's thought of as 'rigid' now was a complete disruptor then. Traditional software companies came up with heavy R&D and huge upfront burn rates.

"So I went along to you and sold you a thousand users for a million dollars. I gave you the CD and you paid me the million dollars and we're done, whether you used it or whether it was shelfware.

"But with software as a service you may give me the same amount of money and pay me upfront - but I can't take that into revenue until I've delivered it to you each month.

"It was very difficult for companies which had offered software because they felt they had to cannibalise their existing model. But eventually the markets grew to love software as a service."

And the story of Salesforce in Ireland has been one of fairly unmitigated success.

It's made Dempsey a wealthy man -and during the boom years he became a publican in Wexford. He now owns two pubs there, the Gaelic Bar in Wexford Town and Foleys in Newbawn.

"I'm a reluctant landlord," he explains. "It seemed like a good idea at the time. It was back in the time when the tech industry was high but it turned out not to be one of my better investments. It was an eye-opening experience. Business is a tough place when things go wrong.

"But there's also a feeling in the last few years that a sense of the right values has come back to Ireland in general, and the pubs were part of that experience for me."

He's married to Bernie and they have two children. His eldest, David, is doing his Leaving Cert - David Senior is currently putting the finishing touches to his doctoral thesis which he undertook "in sympathy" at the vast amount of study his son had to do.

He also has a 14-year-old daughter, Julia, whom he and Marion adopted from an orphanage in Russia 10 years ago.

"We went on several trips until we were lucky enough to get her," he recalls. "It was a three- or four-year process and it was tough to get to the end of it. You go through a whole process with social workers that takes forever. And then we went to the Russian family court and you're making the case why you should have the child. So when the judge finally said the adoption could go ahead, of course that was very emotional."

He says he has occasional daydreams about packing it all in.

"But at the same time I feel passionate about all this," he adds gesturing vaguely to the other end of the massive boardroom table we're sitting at.

"I feel it's my company as much as it is Marc's. It's not - but I have as much skin in the game as he does. It's very personal to me, and only when that goes will I go."

'I've seen people who just won't fold...'

The best advice I ever got was...

"Noel Carroll - the legendary middle-distance runner - used to say that anyone who comes into your office at twenty to one with a coffee cup in their hand is to be avoided at all costs - because they are only trying to fill in the time until lunch. So you need to be gone before they even get there. My diary is booked from 12pm-2pm every day. I run every day in that time."

The most broke I ever was…

"I started as a 16-year-old civil servant in Dublin and we got paid in cash every week. We used to get deposits on bottles during the lean few days leading up to payday."

My favourite share is...

"Tech shares have been very good to me - but they're not for the faint-hearted. I've seen people over the years who just won't fold, no matter how it looks. I was there at Oracle when the share price tanked and a lot of people struggled to know what to do then."

The most memorable trip I've taken is...

"The one to bring my daughter back from Russia. We'll never forget that time."

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