From SAP ERP Software to Saving the World: Catching Up with Shai Agassi
Shai Agassi's rise to SAP's executive board was fast and furious. But his resignation in 2007 and his bold plan to rid the world of its dependence on oil have been equally abrupt. In this Q&A, Agassi speaks with CIO.com about his reason for leaving SAP and his vision for the electric car.
By Thomas Wailgum
Shai Agassi isn’t easy to track down these days. Since his abrupt departure from SAP in 2007—right before SAP’s annual Sapphire show —the former president of SAP’s products and technology group has been on a personal mission that has global aspirations: to get the world’s population off of its reliance on oil.
Agassi is working toward that goal through the company he founded, Better Place, which is in the process of developing a highly scalable transportation system for fleets of electric cars as well as the charging stations that power the vehicles. If all goes according to plan, Better Place will operate and manage the electric infrastructure that these vehicles will run on.
These days, Agassi is busy navigating the automobile and energy industries—what he refers to as a $10 trillion ecosystem—and meeting with government officials, automakers and strategic partners. (In September alone, Agassi says he was going to be on the road 23 days. “You don’t want to have my life,” he says.)
“There’s nothing like this [ecosystem] in the world,” Agassi says. “The two biggest fundamental industries in any economy are cars and energy, and when you touch cars and energy at the same time, you’re sort of at the heart of the economy.”
Agassi’s efforts have earned plenty of notice. This summer, Agassi landed profiles in Wired and The New York Times (columnist Thomas Friedman called him the “Jewish Henry Ford”).
What’s amazing is that with all the high-profile connections Agassi has made, Better Place has only one electric car, no charging stations and not a single customer, as the Wired article notes. But what physical components Agassi may lack right now, the 40-year-old makes up for in ambition, government connections and deep-pocketed backers: the Israeli and Danish governments have bought into Agassi’s vision, and Better Place has received an impressive $200 million in venture backing in just a year.
CIO.com Senior Editor Thomas Wailgum caught up with Agassi earlier this month, while Agassi was waiting for his next flight. The activist talked about what he learned from his five years at SAP, why he left, the technology behind an electric car network, and whether he could get a “good deal” on SAP software for Better Place.
CIO.com: How did you get started with Better Place?
Shai Agassi: I worked on the framework behind Better Place, with the thinking of “How do you get off oil?”, as a social project within the World Economic Forum. I was a member of the Forum for Young Global Leaders. Every one of us got a task to think about, and this idea got into my mind: If we can get rid of [our oil dependence]. I was actually trying to get a country convinced to do this, as sort of a government effort. That was the original approach, but I couldn’t get a government to do something as risky and big as this. The request and advice I got from [Israeli] President Peres was to do this as a company.
Did you feel like your skills at creating and developing business software would work for this new project?
Agassi: SAP is a fantastic company, and it’s an amazing place to grow and I got under the mentorship of Hasso [Plattner, SAP’s cofounder]. I really learned a lot during those five years on how to scale and think big, how to apply things globally, how to replicate successful processes. You don’t think about it when you’re a startup entrepreneur; it’s not part of what you do on a daily basis. And then when you get to SAP, you realize how to get to scale, and a lot of it is what I apply here today. We apply a lot of the processes that we grew accustomed to at SAP during those days.
Your departure seemed to catch everyone by surprise.
Agassi: My view is that you can’t semi-commit. You’re either in or you’re out in companies of that magnitude. I was originally asked to be co-CEOs together with Leo [Apotheker, who’s scheduled to take over the SAP CEO position from Henning Kagermann in 2009], and I said yes. And suddenly when I heard that Henning is extending his contract and the company is on track, I felt that if I wanted to leave, that this is the only time I can leave; there’s no other opportunity. Because once you go down that path, you can’t walk away from being a CEO.
So the minute that my commitment was not required any more, the company was stable and had two more years—you’ve seen that the company is extremely successful going forward without me—I felt comfortable that that was the only time I could actually make that kind of step. I wish them all the best of luck and moved on with my life.
But you missed out on John Mayer’s concert at the 2007 Sapphire show, which you’d been looking forward to?
Agassi: That was painful. I really wanted to see that one.
You were the president of SAP’s products and technology group and had responsibility for the entire product line up until 2007—that included mySAP, NetWeaver and other major application suites. How do you think those strategies and products that you were involved with turned out?
Agassi: I think three things happened at the same time. One, the whole emergence of an agreed upon technology stack, which was sort of semi-standardized with SOA, was something that we had played on very quickly at the onset. I mean I couldn’t imagine SAP not on SOA. It would feel as if SAP missed the Internet. That was a very good shift to NetWeaver at the time. And all the setup that was done has fundamentally helped SAP go forward.
Two, I think SaaS was somewhat underestimated mainly because we viewed everything from the inside-out and not from the outside-in. The effect of SaaS is really an outside-in view. It’s lean consumption. That step was a bit too late at SAP, and I think there’s a lot of effort being done to catch up, and Business ByDesign hopefully is catching up. That would be very important for SAP to catch up on.
The third is consolidation that was pushed by Oracle. I can’t tell you where it ends up at the end of the day, but it really eliminated a lot of options that consumers had and left them with only SAP and Oracle. And from that perspective, the more integrated solution will win at the end of the day. We always saw that, as with Office and what Microsoft did over the years. In every industry, the best integrated solution will win.
The challenge for the world to get off its dependence on oil seems almost unattainable, especially in the U.S. How long will this take?
Agassi: Either we get the world off oil or there’s no world. You’ll see me working on this until the last day of my life.
That’s a bold statement.
Agassi: We can’t afford living on oil anymore. We simply cannot afford this—the disruption, the transfer of wealth, the impact on the environment. It’s just not sustainable. If we don’t do something, the price of oil will creep up, and the economy dies, and everything we worked for hundreds and thousands of years disappears.
How much has today’s technology had an effect on your ability to make Better Place a reality?
Agassi: Battery technology has gotten good enough. It’s about 100-plus miles. Remember, the golden days of the car were the 1950s and ’60s—big cars and small gas tanks that could hold 13 or 14 gallons of gasoline. If the car did eight miles per gallon, that was a good car, and you could go about 100 miles. We now have batteries that do 100-plus miles. That’s where the autonomy of the car is always good enough to get you to the next infrastructure spot [or charging station]. If you’re sub-100, you’re always contained [in one geographic area]; if you’re above 100, you’re free to go.
We now also have the infrastructure for grid management and for communications in the car. We’ve got all these elements that have already been invested in—like GPS—all that stuff that you wouldn’t be able to do Better Place without. The only question is: How do you tie it together correctly?
How do you?
Agassi: A lot of work. It’s a very interesting, multilevel integrated project—from technology but also on the business model, the social aspect, the marketing, on understanding the experience and changing the buying patterns. There are a lot of different angles on it, and we hopefully will get as many right the first time. If not, we’ll change it.
In less than a year, you’ve got some $200 million in financial backing. So what do your investors think of your chances?
Agassi: Look, historically, I never took money from anybody and didn’t return it, and not returned more money to them. So, obviously, I believe there’s more than a good chance to make this a successful company.
It depends on a lot of moving parts—on the car industry, on the price of oil, on the willingness of the government to make bold steps. But I actually believe that time only plays into our hands. There’s nothing in the fundamentals that says this shouldn’t be happening as quickly as possible. There’s nothing in the fundamentals in our design that cannot work.
Last question: What kind of business software does Better Place use—SAP?
Agassi: We’re in negotiations with SAP. I’d love to use SAP.
So you won’t be using any Oracle products?
Agassi:That would make for a great commercial. I never had any negative moment with SAP. Unlike what most people attempted to say in some stories, it was a very good and amicable separation between the two parties. I’m not holding any grudges. We’re designing a lot of software ourselves, and we’re looking to augment it with enterprise software, and I’m talking to my friends over at SAP. I’m trying to get a good deal.