Nikesh Arora discusses sales strategies and market insights (Part 4)

Entire difference between our operating margin and your gross margin is sales and marketing and customer support. If you can find a way of taking 60% of your costs, which typically live in sales, marketing, customer support, take them down to 20, you can be a 40% operating margin business. That was my insight. I'm like, so how do I get sales and marketing amortized over time? And you figured out the biggest expense in enterprise is customer acquisition. That's the maximum. That's what costs the most. So if you have a low revenue product, which you can only sell one product to a customer, it's really hard to build a big business. And if you look at the largest businesses as Microsoft Enterprise Business or Salesforce, or take your largest businesses, they sell a lot to the same customer. That's the insight. I'm like, well, if you're going to be big at Palo Alto, you're going to find out you're selling a lot to a customer. You only have one thing to sell. So you go knock on the door. You knock on 20 doors, you spend all the time, and 15 people say, I'm sorry, I don't need it, I already have it. You're stuck with five. If you knock on the door, you have a truck behind you saying, what do you want? You want this, you don't want this, you want this, you want this. It's like the world's your oyster. What can I get you? I'm with that inside. I was like, well, we need to figure out a way that we can find adjacencies to our business, which the customers will trust to buy from us so that we can keep expanding what we sell to customers so we can go serve the top 10,000 customers in the world and, and increase the amount of money you can get for them. You only get that if you earn their trust. You only get that if your shit works. You only get that if it's kind of best in class. Because nobody wants to buy the second best product of cybersecurity. Kind of sucks. So you want to buy the best, then our need was, you got to be the best. Now, that's kind of one part of the insight. The other part of the insight is, which is still true, it takes four to seven years to build a good technology product. It doesn't matter who you are, what you are, where you are. You look back and say, this thing was not fully ready. It's been seven years. This thing looks closer to being ready. Whether it's AN Uber, it's YouTube, it's Facebook, it's Google search. It took four to seven years, sometimes longer, to build a useful product that the customers found exciting and interesting. And that's true in enterprise as well. So I sat there and said, holy shit. And I just joined this company. You don't have a large product pipeline. It's going to take me four to seven years to build your products. What am I going to do? You're going to acquire them. That's right. But you got to be careful about it, because generally history is littered with bad acquisitions, and companies destroy acquisitions for the most part, whether it's the enterprise or consumer. So you.