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Host: Ray Wang, principal analyst, Constellation Research

Host: Vala Afshar, chief digital evangelist, Salesforce

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Vala Afshar: Your bio…you’ve done a lot!

Ross Mason: I just connect stuff – that’s basically what I do.

Ray Wang: At the time you founded MuleSoft 10 years ago, there wasn’t a lot of stuff to connect. It wasn’t as hard as it is now. Now, everything is trying to get connected in all these different shapes and forms. What was that core problem you were trying to solve and how has it evolved over the last 10 years?

Ross Mason: 10 years ago, the problem really was still horrific. If you’ve ever tried to connect a backend system that was written in an AS/400 system or even SAP, it’s hugely complicated. When we talk about moving data around the enterprise, we forget that the complexity of just getting information from one place to another is still enormously high. But what has changed over the last few years is the landscape and the number of applications are so numerous…there’s so many more building blocks, so many easier ways for developers to build new applications to drive new consumption experiences and to change the way processes work inside organizations and bring new products to market. It’s gotten much more complicated, yet, bizarrely we never really focused on fixing the problem in the first place. It was always an afterthought — it was buy the application (that’s the thing that drives competitive advantage) and then we’ll connect it as best we can. And we did that for 15 years and now we’re paying the price for it…well certainly the big enterprises are. What’s changed is a realization that the old model just isn’t working. The old way of tackling this problem has gotten so painful and slows you down to the point where you can’t make any changes because there’s so much dependencies that you can’t see between applications that any one change has an unknown impact to the rest of the organization. Companies are starting to look very differently and get a lot more serious around connectivity and realize the better and faster they can connect and reconnect things, the better competitive advantage they have because they can bring things to market quicker. It’s a just realization that the old model has fundamentally broken under its own horrific weight and organizations are now just looking for a much better way of doing things. Not just a 5 – 10% difference, but they have to think about scale for the next 10 years.

Ray Wang: One of the hard parts too is in the past everyone hand coding this stuff too. Everyone hand coded it very differently, even for the same problem.

Ross Mason: When I started, I said I’d productize this problem. Either your hand coding, which is a nightmare because it’s millions of lines of code that no one understands or touches. Then you also had the big integration products that really only half productized. They created these massive platforms and the whole point was to sell as much software as possible (sorry if anyone is from IBM, you know what I’m talking about). And now companies aren’t looking for that. They are looking for something much more streamlined and lightweight that will plug into agile processes and productize the connectivity and expose that data much more than we have done. That’s what MuleSoft has ushered into the limelight.

Vala Afshar: On our last episode, the CEO of Workday talked about speed that’s required in business to stay relevant as far as transformation and multi-tenant solutions (AI technologies). He said if you have scientists working on new machine or deep learning algorithms only to find they have to further customize for on-premises solutions that will not allow you to compete and maintain the speed you need in terms of innovation. That consumer application mindset is driving Workday’s success. When you are guiding and partnering with companies going through their digital transformations, what challenges are you seeing (e.g., on-prem vs. cloud, skills, talent, process)? What’s changed over the last 10 years?

Ross Mason: All that stuff. I’ll try to boil it down to some simple things. One is over the last 10 years, the role of the CIO in that organization has been whittled down into a project delivery arm while the business procures software and tells IT that they need to get it connected. The problem with that model is IT hasn’t been able to evolve itself to supporting the business the right way. You can image 10 years ago this model worked. Centralized IT – we own the network, we procure the apps and help you connect them. But there were only a couple hundred apps. Now every organization has at least 6,000 apps that they know of and at MuleSoft we use like a 115 SaaS apps in our marketing department. It’s insane. The reason we do it is not because we using everyone as being an operational application, but we want to be able to quickly plug in a new app and figure out if it works, or unplug it again if it doesn’t or invest in it if we believe it will drive our value. The mindset (even over the last year or two) has been around innovation at the edges – don’t worry about the core, we’ll stick things on the edge and move fast and create creative teams and marketing will drive more of their outcomes. The problem is unless you can unlock the core value of the organization (the data and assets they built up over the last 10, 20, 30 years) none of that stuff works very well and you get marginal results. Now there’s a realization that getting good at change has to happen at the core of the business. The conversations I’m having use to be with CIOs and now it’s CEOs and CIOs together – they’re traveling in pairs a lot more. There needs to be absolute alignment between the IT and business strategy. Six months from now, I think most CEOs will be talking about how they just brought those two worlds together and there’s no difference between your IT and business strategy. We have to get out of the mindset that it’s one function of the organization. Technology is pervasive across every product, every line of business (the way you get your business moving) and if you don’t have a good strategy from the very top (how you are going to bring or remove technology; drive products) – you’re not going to succeed. The idea of innovation at the edge is not working well enough for people. They have to start transformation in the core as well.

Ran Wang: That’s a big shift. One of the things that’s happened in IT is the shift to working closer to business. I think you’re really highlighting that. There are other shifts as well…do you see a trend in terms of the notion of integration / connectivity starting at the beginning or the end?

Ross Mason: If you don’t understand how applications can connect to the rest of the organization…guest what, those projects struggle because people don’t get the information they need. There’s some education going on. ISVs like Workday, ServiceNow, Salesforce are really starting to get it. We’ve got good partnerships there. We are partnering very strongly with SIs that are at varying stages of maturity of understanding what that really means to start at the beginning versus end. The key thing is we always use to tackle this problem with a centralized architecture group would go and figure out how to do it and build the perfect architecture. Nobody is going to invest the time and money to put in the perfect architecture before bringing in the application that they need to run their business. We’ve gotten very good around talking about this new IT operating model that hinges on the value of delivering APIs within the organization and driving reuse and self-service of the data and assets through those APIs so more of the organization can own more of the outcome. It’s an idea we’ve been pushing for the last couple of years and it’s really starting to take hold.

Vala Afshar: Let’s talk about the API economy and smart integration of mobile applications. We talked about the changing role of IT; there are no IT projects, only business projects. An alignment of IT to line of business. More involvement of CEOs, which I agree. The more I engage with our customers (not Salesforce), the more I’m finding the CEO at those early meetings when talking about architecture and impact. And that’s fantastic because you have the decision maker in the room. What are some of the changes and shifts you see in the industry. If you have the MuleSoft annual conferences and you’ll lead with three of your best and brightest customers, what industries are they representing? Who is embracing this API economy?

Ross Mason: A couple key areas: financial services and insurance and banking, but I’m seeing the biggest change in banking especially around retail, consumer and wholesale. There’s so much regulation – it’s gotten so hard to be a bank. I know there’s no sympathy for banks. I’m not vying for the banks. They have a lot to deal with and they just haven’t got the right structure as an organization to meet all the regulatory requirements and deliver products to market faster and deliver the type of consumer experiences that we have all come to expect from all the apps we use. They are struggling and there is a top down mandate to change the culture of banks. It’s not about hey we have to refresh the technology but they have to do things differently wholesale. They’ve gotten over the hump of hey we’ll just try a refresh and see if it works. They tried that the last five years and it hasn’t worked. They now are looking at a much bigger cultural shift. Often those conversations hinge around API-fying the business, especially the UK banks (we have payment initiatives and open bank initiatives). There is a race to become the first API bank – where all their products like lending, mortgage, payments become an API platform that they can build an ecosystem around. A lot are thinking that way right now. Many are getting small early successes. They are investing heavily there because they believe it is the right approach. We’re seeing it in retail versus e-commerce and the blurring lines there. The Jet announcement was one of those. There it’s more around getting really good at understanding channels and how to distribute and engage across channels. Retail and media sound similar now. Retail has more to deal with in terms of logistics (warehousing, delivery, etc.). The final thing is education has been big for us. Education hospitals are doing interesting things to drive innovation. Higher ed – millennials of five years ago have a different view of the world and education is trying to catch up to create the best engagement and learning experience because they are a customer now. When I went to University I wasn’t a customer, I was a student. We’ve become very customer centric – everywhere is feeling it even where you wouldn’t expect it.

Vala Afshar: It’s the only industry where you fire your employees after four years. Ray and I’s paths are crossing with business model innovation. These are business models integrations.

Ross Mason: It’s about the business model, not the technology. The conversations I drive, the technology is actually tertiary. First of all is what do you want to be for the next 10 years of growth? What are the key outcomes you have to get ahold of? What does the organization need to look like to support that change today and tomorrow? Because today is harder than tomorrow. Then you talk about technology and platforms that will get you there. The next shift is we’ll see a lot more discussion around the business and operating models to support.

Ray Wang: One of the areas that I see you in a lot is around blockchain. These are the areas that require a different type of connectivity or level of integration. What are you doing in that area?

Ross Mason: Our play is pretty similar. Connecting the blockchain and feeding blockchain isn’t difficult for us. We’ve got pretty good at connecting stuff. It’s really what will that enable you to do? You have this ledger. What does that mean? What kind of insights do you want to drive from that? I went to a fintech conference this year and I was disappointed by it because there were 5 or 6 blockchain companies and they said hey look we put a RESTful API on blockchain and created a service and I thought okayyy….now what? I wanted to see the business models on top of that that you can now drive. When I go to WSJ do I have to subscribe or can I just pay one cent to a retinal scanner on my camera so I can read the article right then? Blockchain is really good for micro payments. I wanted to hear that stuff, where is the innovation going because we have that capability. Unfortunately it’s still in the hands of the technologists. By the way, I’m a technologist. I’m half technologists and half I want to see the world change. I want to see the big ideas and what’s happening next. We’re not there yet.

Vala Afshar: You’re not just a technologist, you’re a founder of one of the cloud stars. What’s it like to be a founder of a fast moving enterprise startup and now mature company?

Ross Mason: It is awesome and terrifying. It is fantastic. I like doing things like heavy boarding and kitesurfing – it’s an amazing experience but a bit terrifying. The mistakes you make you can really pay for them. It doesn’t mean I’m risk adverse. It means I’m much more mindful about what we do and think about things from different angles. What’s more amazing is the people you attract and the people you build around you – it’s about what the organization does and that’s fantastic. I like to be surprised and delighted by things – I spent some time with the engineering team a couple weeks ago and they showed me something they were working on. Surprise and delight all the way. On the business side, hearing how we’re engaging differently in NA or EMEA and hearing about specific accounts and working with teams on the strategy, it’s very exciting. For me to touch all of that and feel it and see the greatness that people can achieve when they pull together is fantastic. I don’t know how to explain it but it is awesome and terrifying.

Vala Afshar: That’s good to entrepreneurs watching. It’s okay to make mistakes and have butterflies in your stomach.