David Duffield, chairman of enterprise tech giant Workday, is the fourteenth richest man in U.S. tech — an industry where disruption is a religion and startups are patron saints. But after five-plus decades working in technology, Duffield’s not afraid to challenge this orthodoxy. His advice: Young techies would do better if they learned from the establishment and started their careers at a large, respected company.
“Go find one of those [big companies] and count yourself lucky to be imbued with this culture, this values system that made this company successful. Then when you’re ready, go out and do your own thing,” Duffield recommends.
Duffield, who’s 79 and worth $10.3 billion, doesn’t want young entrepreneurs to repeat his mistakes. Starting his first business at 28, he says one of his biggest regrets was not implementing the business lessons he learned from his first job — which was at IBM — until much later in his career.
“IBM was the company that had the best foundation of core values and beliefs,” Duffield says. “I felt it, but I didn’t understand it.” Duffield explained that it took him over 20 years, during which time he started four companies, to finally apply what worked at IBM to his own businesses. This realization would pave the way for the rise of his two biggest successes, enterprise software firms PeopleSoft and Workday.
Duffield describes his beginning as fortunate. He went to good schools in northern New Jersey, attended Cornell University and was in a college band popular enough to bring in spending money and gigs in other cities. But he feels luckiest for scoring a job as a systems engineer at IBM, fresh out of business school in 1964. “I learned that if you located an interesting problem to solve, you solved it well, the customer was happy, said nice things. Well, you got to solve the next problem,” Duffield says. “It was a company [where] you could achieve and you could believe that you’d be recognized.”
Despite this supportive environment, after four years, Duffield felt he could do better striking out on his own. “I got a little full of myself at IBM,” he admits. He founded Information Associates, which provided higher education institutions with an exam scheduling tool, and later early software for accounting and human resources. But after a falling out with his cofounder, Duffield left the company and founded another company, Integral Systems, in 1972.
His second company offered a similar product but was more successful. Duffield says Integral became the number one vendor of human resources systems in higher education and netted him his first seven-figure-fortune, when he sold some of his own stock in the company for $3 million to an investor. Duffield became a founder for a third time when he started a spinoff, Business Software Corporation, in 1979, which sold human resource software to commercial enterprises instead of higher ed, though he rolled it back into Integral two years later.
Throughout, managing people continued to be a bugaboo. “I didn’t know how to keep bureaucracy or infighting or bad behavior out of a company,” Duffield admits. “I either would start a new company, go off on my own and start again or bring somebody in to run it who had more management skills than I did.”
At Integral Systems, he clashed with his hand-picked successor after arguing unsuccessfully that the company should switch from mainframe to then-new client servers. So Duffield left. He founded PeopleSoft in 1987, which used client servers to deliver the human resources software Integral was known for, and eventually expanded into accounting, manufacturing and distribution software. Duffield’s departure from Integral ended up being for the best; the company declined while PeopleSoft grew–and went public in 1992.
Yet Duffield was anxious about another cultural collapse. “We were Wall Street darlings, things were going well,” Duffield says. “I always had in the back of my mind, when is bureaucracy going to set in here? When are we going to start fighting each other?”
The same year that PeopleSoft went public, bestselling business author Jim Collins published his book Beyond Entrepreneurship. Duffield couldn’t stop reading the book, which argued that successful businesses needed values. Suddenly, he realized what his other ventures had been missing. He called his top management to a two-day offsite retreat, passing out copies of Collins’ book, so PeopleSoft could define what it believed in.
“[Dave] cared about company values and company culture way before it was fashionable,” says Workday CEO Aneel Bhusri, who made his career at PeopleSoft and went on to cofound Workday with Duffield. “In the early ‘90s other companies were not thinking that way. He wanted to create a great place to work that also took care of its customers. Now that’s standard best practices.”
As he searched for inspiration to craft PeopleSoft’s new philosophy, Duffield realized he needed to look no further than his first corporate home: IBM. “The really important thing is your core values and beliefs,” Duffield says. “You got to get it right. That’s what I didn’t do in the first three companies and what I had in spades at IBM and I didn’t know it.”
On the list of PeopleSoft’s core values: integrity, fun, profitability and critically, making sure employee happiness was a priority, which Duffield says was also critical to culture at IBM.
“The most important thing for us is our employees, hire the best, treat them well, expect a lot from them. They’re the champions of the business,” Duffield explains. “I reflect back on my days at IBM and it was the same thing. Customers are a close second. Employees are number one.”
At PeopleSoft, workplace culture transformed from boogeyman to asset. A company band playfully named the Raving Dave’s won a corporate band competition twice. Steve Swasey, who served as director of corporate communications from 1999 to 2005, recalls employees affectionately referring to Duffield as “Uncle Dave,” and Duffield signing emails with his initials, “D.A.D.” Employee turnover in 1997 was 3%. That same year, a PeopleSoft executive told Forbes that “If Dave gave us Kool-Aid, we’d drink it.”
The chummy culture didn’t prevent PeopleSoft from falling on hard times. After a burst in growth as companies turned to PeopleSoft for new software in anticipation of a “Y2K” year 2000 problem, business slowed in the late 1990s and layoffs ensued. Duffield brought in Craig Conway in 1998, who led the company as president and later CEO, and was later ousted by PeopleSoft’s board of directors in 2004.
Some employees were skeptical of Oracle alum Conway’s suit-and-tie approach, which clashed with Duffield’s casual Friday culture, Swasey says. Sandeep Sood, who joined PeopleSoft as a consultant fresh out of college, said workers felt the growing pains. “When I first joined, there were jam sessions where the founders were playing instruments. I could email Dave and he would respond within a day,” he says. “By the time [Conway came], it had grown so quickly that there wasn’t just that sort of access and community feeling anymore. I don’t think that’s a discredit to Dave. The company had gotten so big.”
But when it became clear in 2003 that Oracle intended to buy the company, the culture Duffield built prevailed. Swasey and former sales executive Mike King say that PeopleSoft employees frequently compared themselves to the benevolent Jedi, while Oracle’s then-CEO Larry Ellison was Darth Vader. King estimates 90% of employees were against the takeover, fearing a culture at Oracle where they couldn’t thrive, and says that few quit PeopleSoft. “It was definitely a rallying cry,” King says.
Despite its best efforts, PeopleSoft couldn’t escape Oracle’s clutches: The business software giant completed its hostile takeover of PeopleSoft in 2005, paying $10.3 billion and laying off thousands.
Duffield says he was proud of PeopleSoft’s employees. “It was a stunning accomplishment for the company [for] employees to last through some tumultuous periods and I do attribute that to the core values and the culture of the organization,” Duffield says.
When Duffield and Bhusri hatched Workday in 2005, over breakfast at a Truckee, California diner, they wanted to establish their values immediately. “We knew the value system we had was the right one and it worked. When we started Workday we said. ‘There’s nothing we’re going to change in that dimension,” Bhusri says. “Let’s make sure we do a better job of implementing those values this time”
To this end, the pair made sure to personally interview each of Workday’s first 500 hires. They weren’t assessing technical skills, but whether the candidate jibed with the company’s culture. “We were smarter in our hiring than we were at PeopleSoft,” Duffield says.
Today, Workday has a $37 billion market capitalization, more than three times Oracle’s final asking price for PeopleSoft. Sure, it took Duffield several startups and nearly a quarter of a century to crack the code on corporate culture, but he’s happy he figured it out at all. “I aspired to have a harmonious work environment and failed the first two or three times, and would have failed the fourth time had I not woken up and took this core values system and beliefs seriously,” Duffield says.