Letter #246: David Duffield (1992)
Founder of Peoplesoft, Workday, and Ridgeline | The Importance of Customer Service
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32 years ago today, David Duffield wrote a short memo to Peoplesoft employees about the importance of customer service. It’s short and sweet, but packs a punch. He starts with a startling statistic, ties it back the present to the foundation of the company, shares the key insight the has driven the company since the beginning and would for the future, and recommended a book, which he sent alongside the memo to every single Peoplesoft employee.
David is one of the greatest entrepreneurs ever, and one of the only (if not the only) entrepreneur to have founded two separate companies that were valued over $10bn in the public markets, each of which he owned more than 50% of pre-IPO offering.
David was born in Cleveland, Ohio but grew up in Ho-Ho-Kus, New Jersey (population: ~1500 in 1940) where he family moved when he was just 6 months old. He went to school nearby at Cornell, where he studied electrical engineering as an undergraduate and received an MBA after. After graduating in 1964, he joined IBM as a systems engineer and marketing representative. Just four years later, in 1968, he left to found his first startup, Information Associates, which developed university exam scheduling software. Another four years later, in 1972, David left to start Integral Systems, which went on to become the top higher education human resources management system vendor. He worked at this longer, but seven years later, in 1979, David moved on to start Business Software Corporation, which provided real-time human resources and payroll applications for commercial enterprises. David worked on BSC for eight years, before founding PeopleSoft in 1987. He was 46 years old.
Despite having started three companies prior to PeopleSoft, David had not yet hit it big. In fact, he had to mortgage his house for the first two years until the company was able to support itself. By 1992, the company had gone public. By 1999, David had stepped away as CEO. However, when Oracle tried to acquire the company, David stepped back in. Ultimately, Oracle’s hostile takeover succeeded, and they acquired PeopleSoft for $10.3B. The deal closed in January of 2005.
Shortly after the hostile takeover, David and Aneel Bhusri, one of his lieutenants at PeopleSoft, met for breakfast and decided to effectively restart PeopleSoft, but in the cloud. The two moved quickly, starting Workday just two months later in March 2005, with David and Aneel serving as Cofounders and Co-CEOs. They IPOed in 2012 at a valuation ~$4bn. Today, the company has a market cap of $70bn. Two years after the IPO, David stepped aside to retire (although he remained on the Board until 2022).
But after retiring, David quickly became “bored silly.” Three years after stepping back from Workday, David started a sixth company: Ridgeline. He brought on a Co-CEO in 2023, and officially stepped back earlier this year, although he remains heavily involved in the company as Chairman. The company is eyeing an IPO in the next fear years as it targets $1tn of assets on the platform and a revenue run rate of $150mn (current revenue not disclosed).
I hope you enjoy this memo as much as I did!
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Letter
TO: All PeoplePeople
FROM: Dave Duffield
DATE: December 21, 1992
SUBJECT: The Importance of Customer Service
“More than half of our staff is devoted to customer service.”
You’ve seen that phrase is in our marketing literature and it’s part of every public presentation we make. It’s not an empty PR slogan, it’s not marketing hype, and it’s not statistical trickery. It’s the simple truth.
When we first formed PeopleSoft in 1987, we chose “Excellence in Customer Service” as our primary goal. We knew that building high quality products based on the emerging technologies—SQL, client/server architecture, GUIs—would give us an enormous advantage of the competition. We also recognized that, with few exceptions, the software industry had earned an abysmal reputation for customer service. It was clear that the company which provided the finest customer service—given adequate technology and product functionality—would become the market leader. We have and we are.
It’s a given that we’ll continue to build first-rate products. And to sustain our leadership position, excellence in customer service will continue to be our guiding principle.
With that thought in mind, I’ve asked our Admin group to distribute to all employees a copy of Total Customer Service, by William Davidow and Bro Uttal. “Service leaders,” they write, “almost always seem to dominate their industries, both in sales growth and profitability; service laggards end up at the bottom of the heap.” And further: “In all industries, when competitors are roughly matches, those that stress customer service will win.”
The book spells out clearly and succinctly the components of a successful customer service operation. It’s anecdotal, it’s fun to read, and I think it underscores many of the reasons for our success. I recommend it to you all.
And thanks for reading another Dave Duffield harangue about customer service!
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Wrap-up
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