Why Ford's CEO invested $182 million in the $2.8 billion startup that teaches how to be more like Google

Back in May, Ford led a $253 million funding round into software company Pivotal, with Ford confirming independently that its share of that round was $182.2 million, and that its CIO would be joining the board.

It’s in good company: Titans of industry like Microsoft, GE, and EMC, the tech company soon to be subsumed by Dell in its own mega-deal, all own sizable stakes in Pivotal, too.

Ford is also a Pivotal customer, announcing back in December 2015 that the two had teamed up to build the software that goes into its efforts to build smarter, internet-enabled cars.

Earlier this week, I took a trip to Pivotal’s San Francisco headquarters. Something I kept hearing was that the Ford deal came about because CEO Mark Fields himself basically fell in love with Pivotal and everything they do during their initial meetings.

Here’s why Ford, alongside fellow Fortune 50 customers like Home Depot and Allstate, loves Pivotal so much — and what it is, exactly, that Pivotal does that’s so special, based on my observations spending a morning at their offices.

Digital transformation

Pivotal’s whole schtick is around “digital transformation.” The idea is that thanks to the fact that software keeps eating the world, it’s increasingly important that big companies, like Ford, learn how to produce better software.

On paper, that sounds easy. After all, these big companies have fundamentally unlimited resources, right? Just hire some programmers and throw money and startup-style catered lunches and at-desk massages at them until you succeed.

In reality, though, it’s not that simple. The traditional approach to software development, with lots of meetings, design by committee, and tons of red tape to cut through, is still in practice at many companies, large and small. It moves slow, with a very plodding and deliberate pace.

Pivotal ceo rob meePivotalPivotal CEO Rob Mee

And so while startups like Uber and Airbnb can push out new apps and few features seemingly overnight, the Fortune 500 has historically been very slow to deliver new software. Tech titans like Google and Facebook are the exceptions, taking that rapid iteration approach and riding it to massive market success.

Even if you do adopt that kind of philosophy, you might also find that your technology can’t keep up. If your company has been rocking the same approach to IT, with the same old servers and the same app deployment methods since the nineties, it probably can’t keep pace with the Google style of working.

So if you’re a Ford, a Home Depot, or an Allstate — all Pivotal customers — you might find you need some help. Here’s where Pivotal comes in.

Boot camp

When a customer contracts up with Pivotal, they’re not so much hiring a consultant as they are signing your developers up for an intensive 10-to-12 week co-working program.

Pivotal founder CEO and founder Rob Mee points out to Business Insider that it’s “about the same amount of time” as the three months of a military boot camp or any other program designed to change habits.

Pivotal started in 1989, then known as Pivotal Labs, as a relatively traditional software consultancy. By the end of the nineties, Mee had started to develop some truly radical ideas about how software should be built and teams should be managed — ideas his team imparted on companies like Google and eBay as a contractor, relatively early in their development.

Those ideas have been honed over the intervening decade-plus. Now, when a customer signs on with Pivotal, here’s what happens. First, they come in with a project they want to get done, like shipping a new iOS app. To complete that, the customer sends their development team to literally work right alongside Pivotal employees at one of their 17 offices worldwide.

For those three months, the customer soaks in all of Pivotal’s philosophy around “sustainable software development.” Pivotal employees and customer developers group up, learning from each other as they go.

At the end of the three months or so, the project may or may not be fully finished. But the customer has, ideally, learned better habits for building software that they stay with and spread to the rest of the company. And, I’m told, Pivotal sees repeat business from teams looking to build new projects and learn new lessons. Even if they then customise it for their own needs, the core tenets stick.

“It’s not a religion, it’s not the only way of doing things,” Mee says. “Once you’ve internalized it, you own it.”

Lessons learned

The philosophy espoused by Pivotal is what Mee calls “sustainable software development,” and it’s all about maximizing productivity.

For instance, the whole culture is around absolutely minimising meetings. There’s a 9:06am all-hands meeting every day (breakfast is provided), and then, for the most part, no further meetings are required over the course of the day.

Instead, Pivotal emphasises the idea of constant collaboration, on chat services like Slack or otherwise, so problems can be solved as they come up and so appropriate outside parties can be brought in at that moment. Pivotal is also a big proponent of the model of “pair programming,” where two developers work side-by-side, spot-checking each others’ code and “co-mentoring” each other.

Similarly, in lieu of forcing developer teams to meet with each other, members on each Pivotal team take turns on “Interrupt” duty. As in, if anybody in the company has a question for that team, they’re the ones designated to take their headphones off and lend a hand. Everybody else is free to keep coding, with no corporate distractions, guaranteed.

Pivotal meetingMatt Weinberger/Business InsiderA group of Pivotal and Allstate engineers meet briefly before getting to work in the morning.

Pivotal also espouses the idea of small, “balanced” teams, where product managers, designers, and developers are all represented, such that the needs of one side of the equation are placed over the needs of any others. They’re always in communication.

Last, but not least, Pivotal sells the Pivotal Cloud Foundry platform, a common platform for developers to build apps faster across their own servers or mega-clouds like Amazon Web Services or Microsoft Azure.

“It’s a better human capital model,” says Pivotal VP of Cloud Platform James Watters.

There’s always the hazard that even after the three months is up, a customer will go “cargo cult,” as Pivotal employee put it, and adopt the look and feel of the Pivotal open floor-plan office…without actually adopting any of the big thoughts on how they build software.

But the customers who “get” the Pivotal method, like Mark Fields, absolutely love it, I heard from Pivots (that’s what they call themselves). And with Ford boasting that Pivotal has helped it decrease the time it takes to roll out some new software from months to weeks, it seems to be working.

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