The first step of getting spun out of Sequent was actually simpler than one might have imagined. Since Sequent was still funding our operations, not a whole lot changed. Most of the changes were pretty simple. We were moved into our own organization, and given office space on the Sequent campus that was somewhat removed from the other organizations at Sequent. We picked up a marketing person from Sequent that was going to start driving us forward from a business perspective. We also picked up our first sales person and implementation manager, who would manage the process of selling our solution, and building a team to implement our solution for customers. Things looked promising as we had a lot of activity presenting to prospective new customers.
From about April of 1996 through July of 1996, we spent a good bit of time going through the legal processes to establish our own company, etc. At that time, we also started looking for our first CEO. There were several candidates, but I think we all felt it would be best to have a CEO come in from outside of Sequent. It needed to be someone that had a background in data warehousing, and was familiar with the market. We eventually settled on an individual who had spent quite a bit of his career with Teradata, a key player in the data warehousing market, and who most recently was working as a data warehousing industry analyst for one of the large IT advisory firm.
The group of us from Sequent had formed a tight bond. The new person coming in was an outsider, which was ok with us, but the transition with the new CEO on board was far from smooth. In my mind, there are two approaches when you are a new person trying to fit in with an existing tight-knit group. The first approach is to use caution, and learn what you need to learn in order to fit in with the team. The second approach is to come in wielding your power, and forcing yourself and your philosophies on the group. Unfortunately, the new CEO choose the second approach, and it represented our first major challenge for DecisionPoint as a company, and myself as a person.
The new CEO made it very clear that he was in charge, and that he was going to “break” our Sequent ways of doing things. That wasn’t necessarily bad, but the process he used was just appalling. They often say that in a startup the toughest decisions you make have to do with people. That was definitely the case for us. For a period of time, the marketing person from Sequent that we brought on had functioned as our leader. Yes, I had founded the company, but my role was to get the software moving in the right direction. The marketing person picked up the more business oriented functions. This person had a lot of respect from the rest of the team, and was well liked. The first thing the new CEO did was to fire the marketing person as he didn’t feel the person was the right fit for us.
The rest of us were shocked and horrified. We saw no reason for the dismissal other than the fact that the new CEO wanted to gain power by taking out the person that had the power. It was the first time I had ever experienced something like this in my career, and I was dumb founded. Being new to the experience, I wasn’t sure what I should do. Do I risk my relationship with the new CEO by confronting him about the decision, and turn my back on a co-worker I admired? Do I let it happen and hope all goes well? Do I have the power in the small organization to stand up for my views? It was all very confusing and disturbing. Ultimately, I decided to let the new CEO do what he felt he needed to do without a lot of resistance. I did voice my disapproval, but did not push things very far. I think part of it was that I just didn’t understand my power or value within the organization. Looking back on the situation, I should have been more confident, and put up a much stronger resistance to the decision the CEO had made. Hindsight is always 20/20, as they say. We did manage to get through that experience, but it would set the tone for the remainder of the new CEO’s tenure.
It was about this time that I faced my first personal challenge related to DecisionPoint. While everything was going on, we had managed to sell to two different customers in the US. I was the only person capable of installing the software to get these customers going. I spent roughly five out of six weeks traveling from my home in Portland, Oregon to both Boston, Massachusetts and Boulder, Colorado getting the customers installed and running our software. From a technical perspective, the software installed and worked well for the customers. However, the frequent travel was starting to take a toll on my relationship with my wife and young kids. It was a horrible sacrifice to make, but in order to get the company going, I had to do it.
In July of 1996, we were officially spun out of Sequent, and the business was starting to move along quite well. One member of the Sequent board of directors decided to invest some of his personal money into DecisionPoint. Plus, the new CEO had managed to convince the CEO of another large software company to invest some of his personal money. By the time it was all said and done, we had accumulated about two million dollars in what is called “angel money”. People that invest their personal wealth in a startup are traditionally called “angel investors”. Hence the term “angel money”. Unfortunately, that money would not last very long.
One of the first steps the new CEO did was to have a team offsite at a resort on Mt. Hood in Oregon. The goal of the offsite was to figure out where we were and where we wanted to go. The new CEO brought in two former associates to help with the meeting. One was a technical person that would work with the engineering team, and the other was a marketing person that would work with the sales and marketing teams. It became clear that the new CEO wanted to bring these former associates into DecisionPoint. We really like the engineering manager, but he wasn’t interested in joining. The marketing person wanted to be part of the organization, but he was extremely abrasive, and treated the rest of us like he was already guaranteed a position in DecisionPoint and was going to start calling the shots. There was a lot of conflict, and it was very clear that no one, including the engineers, like the marketing person. As a group, we expressed our views to the new CEO. While he was resistant to our opinion, he eventually gave in. It was very important that we stand our ground, and we did.
We began to solicit venture capital from different venture capital firms in the Bay Area. The goal was to find some investors that would invest in the company to give us a solid start. The challenge we had was that it was just the start of the internet boom, and what we did was not related to the internet. Unfortunately, the venture capital firms were mostly interested in companies looking to start businesses in the internet space. So, the odds were stacked against us in finding any level of funding. What was frustrating at the time was the fact that we had a business plan that showed a lot of solid growth. Most of the internet startups had a vision, but it was clear that their business plans were fraught with risk and the chances of their survival would be slim. However, the venture capital investors were only interested in making a lot of money quickly. If they invested in an internet company that went public and then fell apart, it was no big deal because they would have already made money on their investment. Their view was definitely long term, so no matter what we said, they weren’t very willing listeners.
We did manage to get pretty far along in the process with one venture capital firm, and got to the stage where they have an independent third party review the your technology. During the meeting with the third party we would have another major hiccup. The meeting included the new CEO, the sales person that joined us from Sequent, and the implementation manager that also joined us from Sequent. Throughout the day there were a lot of questions and answers, most of which were answered by myself, the sales person, and the implementation manager. We had done it several times before, so didn’t think much about it as the day went on. However, after the meeting, there was a huge problem.
The new CEO took offense to our ability to answer all of the questions, and felt that he was either left out or pushed out of the meeting. The bottom line was that he hadn’t been on board that long, so there wasn’t a lot he could answer in a technical meeting. He started to berate the three of us for taking over the meeting and keeping him out, which we never intended to do. He claimed that the three of us were “too much like Sequent”. Personally, I was ready to jump across the table and beat him to a pulp. I was that angry. Fortunately, the implementation manager kept his cool, and managed the situation quite well. He looked at the new CEO, and basically asked that if the new CEO felt we were too much like Sequent, he was interested in knowing what we were doing to cause that feeling. The simple response was “you all wear white shirts”. It seems ridiculous that anyone would say something like that, but it happened. I think it was at that point that we all realized that working with this CEO would be far more challenging than anyone had expected.
It was also about this time that the new CEO started to bring in his own management team. He ended up hiring two of his former co-workers at Teradata as the Vice President of Sales and Vice President of Marketing. The transition of those two individuals into the team went fairly smoothly. Additionally, the new CEO started to introduce several more of his former colleagues from Teradata. Some of them were good people that we ended up hiring, but several of them were also not a very good fit. It was clear that the new CEO was trying to bring in his own people to try and combat our core group from Sequent. Fortunately, we were able to stand our ground, and only bring in the people that would best fit into the organization. It was neither easy nor comfortable and there were a lot of arguments that started during the process.
Around the same time, there was also a major conflict that I had with the CEO that caused quite a stir within DecisionPoint. I had been asked to come up with an engineering plan for the next release of our product. I sent the plan to the CEO, and he sent me a one line response: “that’s not good enough, we’ll be dead by then”. That was the last straw. I had put up with so much from the CEO, and I was done taking his crap. I went to the CFO of Sequent, who was chairman of the board of DecisionPoint, and resigned. The CFO did not accept my resignation, and had me take a week off to cool down and see if we could resolve things with the CEO. At the end of the time off, I did reconcile with the CEO, but things between us would remain uneasy for the remainder of the time the CEO was with DecisionPoint.
As we continued to seek venture capital funding, a major software vendor decided that they would like to start the process of acquiring DecisionPoint. It was all very interesting in that we were a new company, and we needed to do a lot of work on our product in order to fit into that company’s software product line. The acquisition process was managed in a very informal manner, and it was a critical mistake on our part. We were to stop selling our existing product, which halted all sales and marketing activity. Additionally, we were required to complete engineering work that would make our product better integrated with other software solutions of the acquiring company.
I think we were all naïve in what would happen, and assumed that if we fulfilled our obligations as part of the acquisition process, everything else would go smoothly. This was re-enforced by the fact that the CEO of the acquiring company had been one of our “angel investors”. There were never any legal agreements signed during the acquisition process, and so all of the information being exchanged between our two companies was done so in a very open manner. We shared a lot of our intellectual property, experience, and ideas with that company.
Unbeknownst to us, there were a couple of things going on within the lower ranks of the acquiring company. There were several individuals within that company that felt that they should build their own solution rather than acquire DecisionPoint. Also, we had not known this, but whenever that company was looking to acquire another company, there had to be consensus amongst every employee from that company in order to move forward with the acquisition. In our case, the two people that wanted to build their own solution voted against the acquisition, and that was it. It was over within a five month period.
The acquiring company decided not to buy DecisionPoint. We had halted all sales and marketing efforts, and we were out of “angel money”. The acquiring company took all of the ideas that we had shared with them, and went off and built their own solution. In addition to that, some individuals within that company went out of their way to prevent us from bringing our solution to market that we had built as part of acquisition process. To say it bluntly, we were screwed, and there’s nothing we could do about it. I sunk into a fairly deep depression wondering what had gone wrong, and I was very angry about the whole situation. I learned a tough lesson from that experience. The one positive that did come out of the situation was that the CEO of the acquiring company personally called me to apologize for the situation. It was a small consolation for what had happened.
It was at that point that the decision was made to terminate our CEO. It was felt that he was running DecisionPoint into the ground, upsetting employees within DecisionPoint, and lead a very poorly managed acquisition process that failed. While it was a relief for me personally to see him go, it also presented another challenge for us. We were no longer under the CEO’s thumb, but what would we do next.
A lot of things happened as DecisionPoint was stalled following the acquisition process. We weren’t sure what direction to go, and a lot of employees were losing their confidence in staying with DecisionPoint. The implementation manager, who was a close friend at the time, decided to leave and find more stable employment. At one point, I even interviewed for another position within Sequent. It got to a point where I resigned from DecisionPoint and took the other position within Sequent. However, that proved to be a catalyst for the next phase of DecisionPoint. The CFO at Sequent, who was also the chairman of the board for DecisionPoint, did not accept my resignation, and decided that we would “re-start” DecisionPoint.
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