DecisionPoint had just experience what could be called “strike two” in its attempt to get off the ground. First, a large company had decided not to acquire DecisionPoint. Second, a management team that was hopeful in taking over and running DecisionPoint had to back out because of lack of exclusivity they felt was needed to solidify the market for DecisionPoint’s products. Up until this point, I had remained fairly optimistic that we could make a go of it. However, after the second strike, doubt started to creep into my mind. Could we find the right management team? Could we secure appropriate financing to give us the start we desperately needed? Or, would we have to become yet another startup that failed to get off the ground? These were all questions that ran through my mind on a regular basis. I certainly had a lot of doubts at the time.
While DecisionPoint was going through several ups and downs, there was another side story going on at Sequent that DecisionPoint would eventually benefit from. One of Sequent’s first individuals to get involved in the marketing and partnerships in the data warehouse space had decided to leave Sequent to take his career in another direction. About the time the management team backed out of running DecisionPoint, this individual decided that leaving Sequent and the data warehousing market to pursue a new career was a mistake, and he wanted to return to what he loved doing. One of our angel investors had maintained contact with that individual, and when that individual decided he wanted to return to data warehousing, our angel investor hooked him up as our next CEO.
This individual not only knew the market we were in, but was well known as a creative thinker with innovative ideas within the data warehousing market. Additionally, he was a very dynamic speaker and presenter, which would help DecisionPoint get into places we had not been before. In many ways, I was relieved when this individual came on board. While I didn’t always agree with his decisions and actions when he was part of Sequent, I knew he would bring a lot of value to our team. I finally felt I would not have to be the only one to carry the torch for DecisionPoint to people outside of the company.
Our first mission, once this individual came on board was to start ramping up the process of selling DecisionPoint. Sequent was becoming impatient with our inability to sell to more customers even though we were going through a very rocky period. Sequent wanted signs that we could make a go of DecisionPoint by proving that we could close some new customer accounts. The push from Sequent was natural, but it also complicated things for many of us on the team. We didn’t have a whole lot of formalized collateral on the product, we didn’t have a formal pricing strategy on it, we didn’t have the appropriate legal contracts in place, and we had no sales proposal process along with the related documents. We were going to have to build a lot of this on the fly, and a lot of it fell on my shoulders as I was in the best position to understand the product along with the customers, which meant I had the deepest background on how the documents should look to customers. Fortunately, Sequent gave us a lot of help and support in this area, especially with legal agreements and contracts, which we could have never developed on our own.
The good news is that we had made some early traction with three large retailers, and a service based company. We were coming to the end of our fiscal year, and we desperately needed all four deals to close, and they did…literally on the last minute of the last day of the year. Two of the retailers were fairly simple to close as we made connections via the Sequent sales force. That’s not to say it was a completely done deal when we were introduced to them. We had a lot of work to do to close the deals. However, having the initial introduction and contacts made for us was a big head start.
We were able to gain access to the third retailer via an IT person that I had worked with at Sequent, who had left Sequent to go work for the retailer. He made the initial introductions for us, and we were able to make the right contacts within the account in order to make several presentations. At that time, that retailer’s information technology (IT) department was very distributed, which worked to our advantage. Many of the groups within the retailer didn’t have the money to buy our solution. However, a group out of the Canadian operation had a manager that was desperately looking to be the first to do something new within the retailer and he was pretty creative with the whole budgeting/financing process. He would be the first to implement DecisionPoint, which would lead to a global site license of DecisionPoint with the retailer. Eventually, DecisionPoint would be implemented at fourteen different sites within the retailer. The site license deal was a steal for the retailer and we desperately needed the business. Hindsight being 20/20 once again, we should have negotiated a better deal. But, given where we were at, we didn’t have a lot of time to negotiate and the retailer used that to their advantage.
The service company was a bit of a surprise for DecisionPoint as we didn’t really have connections into that company. However, a driven sales team in the Midwest (Chicago) pushed into the company and made enough progress to give the customer confidence in our ability to deliver. The company had a fairly small operation, so the amount of money they would have to spend for the DecisionPoint software was at a level that would not draw any attention if the implementation of DecisionPoint failed. So, they were able to take a small risk implementing software from a very small software startup.
Our CEO and I put our heads together and came up with a bold sales and marketing strategy about the same time all of this customer activity was going on. A typical data warehouse implementation was often categorized as “2-2-50” by analysts in the data warehousing industry. The categorization meant that the average data warehouse project took two years and two million dollars to complete, and at the end of the project, there was only a 50% chance that the data warehouse implementation would bring any level of benefit to the business. That was a very high risk proposition, which caused many companies to not even consider a data warehouse implementation.
DecisionPoint was built with a full set of integrated data warehousing tools along with the concept of pre-configuration of the data warehouse, which was unheard of in the industry. We called this concept a “Source Expert”. We had determined that by targeting our data warehouse solution at customers with specific source applications, we could pre-configure 75% of the data warehouse for those customers with minimal implementation effort and before we ever stepped on the customer site. However, we took this one step further. For the 25% that could not be pre-configured, we came up with software that would read how the source application was configured for the customer, and automatically re-configure the data warehouse environment based on the source system configuration. There would again be minimal implementation effort as all of it was done in software.
This capability within DecisionPoint allowed us to come up with two groundbreaking concepts within the data warehousing industry. First, we came up with the concept of a proof of concept where we would implement the DecisionPoint solution at the customer’s site within two weeks. Second, as an extension of the proof of concept, we instituted a try before you buy concept where after the proof of concept, the customer would have several weeks to run and evaluate the solution at which time they could decided whether or not to buy the solution.
As far as the proof of concept goes, we couldn’t have been happier with the results. At the end of the two week implementation, end users at the customer site could start using the solution just like it was a full production implementation. The reason we implemented the proof of concept was because we were completely breaking the mentality of the data warehousing market. Every customer was painfully aware of the “2-2-50” phenomenon, and they were baffled how our solution could be implemented so quickly and completely in a small fraction of the time of any other data warehouse solution available on the market. Our goal was to completely shatter the previous mentality associated with the data warehouse market, and it worked.
The try before you buy concept did not go nearly as well. We didn’t plan well enough, and so we went into many try before you buy situations with a lot of faith that if we did what we said, customers would naturally buy from us. As a result, we didn’t put a lot of rules or legal agreements in place that would bind the customer to buying the solution after we were successful. Additionally, we didn’t charge for the proof of concept or try before you buy program, so it was difficult to differentiate between the customers that really wanted the solution versus those that were just testing the waters. We had a lot of customers back out buying the solution as a result of the try before you buy program even though in every situation, we had successfully implemented our solution for them. It was both a painful and costly lesson. Over time, we would develop more stringent rules for the try before you buy program along with charging the customer for the time we spend implementing the solution and the appropriate legal agreements and commitments from the customer. Even with those things in place, our proof of concept to close ratio was terrible.
At this point, customers that we had closed at the end of the year were starting to complete the implementation of our solution and starting to see real benefit from the implementation. We had some really good success stories, including one of our retailers that started closing unprofitable stores after looking at the financial information that we showed them for their stores. We were only two weeks into the implementation, and the solution had not been fully implemented, but the customer was already using it to make critical business decisions. It was really cool and really scary at the same time. Our solution was working as advertised, but created an interesting dynamic within this retailer as far as how long they were willing to let an unprofitable store recover. It was at that point I realized how cut throat the retail industry was. Profit margins are slim at best, so if there was a store that was not performing, they didn’t have a lot of time to make it profitable and they would close it to stop losing money at that location. Our goal was to help companies make better business decisions to make them more profitable, but it wasn’t necessarily our intention that would be done by scaling down operations so radically. We certainly did not want to be known as the company whose software caused stores to close or get people fired. We would have to fight that image on an ongoing basis from this point on.
By all accounts, things were going well for DecisionPoint. With our new found success, we were starting to attract more attention from investors that wanted to put money into DecisionPoint so that we could grow the business faster. Additionally, we were starting to sell the solution to companies that had never bought software from a startup ever before. These were huge, international, organizations that had a lot to risk, and yet they were taking that risk to implement our solution with hopes it would bring them the same value that our other customers achieved. While the implementations did have some bumps along the way as most do at some point, we were successful overall. At the time, it seemed like nothing could stop us. We were going to take the data warehousing market by storm by changing the game on the established data warehousing software providers and establish a trend that our competition would have a tough time keeping up with.
Many people often say that it’s never as bad as it seems and it’s never as good as it seems. Unfortunately, at DecisionPoint, it was good, but definitely not as good as it seemed. Three critical events would occur that would present a huge problem with DecisionPoint’s ability to grow as a company. The first two events would not necessarily be viewed as negative on their own merit. However, they would contribute to the third event, which would pose huge problems for DecisionPoint’s future.
The first event was that Sequent was in the process of being acquired by IBM, and to IBM, DecisionPoint was like a wart on Sequent’s butt that IBM wanted no part of. While DecisionPoint was starting to become self sufficient, we always had the Sequent backing in the event that something went wrong. IBM was unwilling to continue that relationship. They insisted that DecisionPoint go out and seek additional investors that would provide DecisionPoint with enough operating capital that the relationship with Sequent and IBM could be terminated. This meant that we would have to scramble to find the additional funding. Behind the scenes, we had continued to seek additional investors, but now it was an urgent priority, and we only had a couple of months to get something done.
As an aside to all of this, we did have one very funny event that happened as a result of this process. Sequent had provided DecisionPoint with quite a bit of money to keep operations moving. Additionally, DecisionPoint had brought on a brash new CFO that was a master at managing money. During the negotiations with IBM, at one point, the IBM representative asked what DecisionPoint intended to do about paying accrued interest on the loan that Sequent had provided us. Without even thinking or flinching, our CFO raised his middle finger at the person from IBM, which was basically a sign that if IBM was expecting interest to be paid, it wasn’t going to happen. It wasn’t the most appropriate response in that setting, but it gave us a story that all of us laugh about to this day.
Getting back to our story, the second event that happened was a result of the first event. Because of everything going on with IBM and our critical need to find other financing, one of our angel investors connected us with a large European telecommunications company that was willing to provide financing to DecisionPoint. At the time, it was before companies like telecommunications, cable, and satellite service providers were providing internet service. They were all looking to get into the business, but needed a good first step.
To the European telecommunications company, we represented a way for them to get that first step into what was known as the data center outsourcing business. At a high level, that business is designed so that the telecommunications company would run the computer systems of other companies on a site that the telecommunications company provided and managed. Given that our solution was very fast and easy to implement and support, it was a way for the telecommunications company to get into the business known as outsourcing without having to make a huge up front investment in people and training. They could focus their attention on the computers and facilities, while at the same time implementing a solution quickly that customers would get a lot of value out of without a lot of human costs
This lead to the second event mentioned above, which was that the large European telecommunications company became our first real investor. As part of the investment, DecisionPoint established a partnership with the telecommunications company in the data center outsourcing business. To make things even more complicated, the telecommunications company was running the software that DecisionPoint supported, so they also became a customer. And, over time, they would become one of our largest customers worldwide. Eventually, the partnership in the data center outsourcing business would dissolve. However, to this day, that large European telecommunications company remains one of our largest and most loyal customers. It’s been very interesting to watch the relationship evolve.
As I said before, as a combination, these first two events weren’t necessarily a bad thing. The relationship with Sequent was being ended by IBM, but we did manage to find an investor that would help us continue to do what we needed to do. In fact, if memory serves, they invested close to $20 million in DecisionPoint. A percentage of that money went towards paying off some of the bills we had put on hold during the transition from Sequent/IBM to having our own cash. It was definitely a relief to get those bills paid and taken care of as the vendors were starting to worry if we would ever pay them. Even after that, we still had a pretty substantial amount of money in our bank account.
However, this would lead to the third event, which would become a problem. We were very much in the same situation as a person that was starving, and then suddenly put in front of a large buffet table to eat as much as they could. For a long period of time we had gone along “starving” ourselves to do what we needed to do to stay alive. Now, we were like that starving person. We had all of this cash to do what we had never been able to do before. We had a lot of plans and great ideas that had been on hold, and we wanted to start pursuing those ideas. But again, like a starving person, rather than have a methodical plan of attack, we started sampling a little bit of everything from our “idea buffet”. This lead to a spending spree, and that became a huge problem.
For a long period of time, we had been very careful about the people we had hired. Now, we started to re-organize, and began hiring at a break neck pace. Some of the hires were field sales and consulting resources, which were desperately needed to try and land more customers. However, a lot of the new hires were in the engineering organization. We would come up with a new idea for a new product line, and then hire engineers to build that product line. We did this without any market research into who our competition would be, or what the potential sales revenue would be. We simply believed that if we built it, we could out maneuver the competition, and achieve enough customer sales to sustain the new product line. Nothing could have been further from the truth. We were extremely disorganized, and we ended up with a lot of half finished products that were never sold, and engineers that weren’t necessarily needed.
In the course of a couple of months, we had hired so many people that we not only filled the office space that we originally leased, but we also leased space on another floor in the same building plus another floor in an adjacent building. At the time, it was extremely baffling why we couldn’t complete more products in a faster period of time. But, looking back on the situation, we were again like the starving person at the buffet table. While the starving person gorged themselves on food until they were too full to move, we gorged ourselves on new employees to the point where we couldn’t move in any product direction easily. There were a lot of ups and downs, and a lot of employees that were only around for a couple of months.
We did end up hiring a VP of Human Resources and a recruiter to help get some sanity to how we were hiring, how we were deciding to pay people we were hiring, and many other things. It definitely helped, but was not a cure to our problems. It just brought some organization to what we were trying to do from a staffing perspective. It was also at that time that we decided that we needed to move to a new facility where we could get all of the employees into one floor on one building. It was also at that time that we started to realize that we were spending money faster than we could sustain, and that we weren’t closing new customer sales at a rate that we needed to sustain the spending levels. Our first meeting about cutting spending wasn’t terribly difficult as there were some marketing programs that we could put off, and there were some open job requisitions that we would not hire people for. This seemed to offer short term relief to our fears.
Shortly after we moved into our new facility, things started to unravel pretty quickly. The first event wasn’t necessarily a business event, but was emotionally traumatic. Our VP of Human Resources, who was a man, found out that his breast cancer had returned. I never knew that a man could get breast cancer, but it does actually happen even though it’s rare. He had several previous battles with breast cancer, and beat them all, but this seemed to be a more severe case of the disease this time around. Eventually, he would have to leave DecisionPoint to focus his efforts on his battle with breast cancer. Again, it wasn’t a business event, but it had an emotional impact on the entire organization. He was a wonderful person, and an excellent VP of Human Resources. Unfortunately, he would pass away shortly after he left DecisionPoint. He was a fighter, and wonderful person. A disease so awful should not strike someone who is as wonderful as him.
We also reached a point where we were starting to run low on cash, and our sales weren’t picking up as quickly as we had hoped. We had reached approximately 120 employees at the time, so there was no easy way out of the difficult situation. It became so critical that we were dependent on one customer making their payment on time in order for us to be able to pay our employees. In the management team, there was a lot of nervousness and frustration. No matter how we looked at the situation, we were going to have to layoff employees. This would not be a small layoff, but a significant cut in staff. We had grown so fast, and ended up in a new facility to handle the new staff. Now, we were in the new facility and cutting staff, so we really would have been ok in our previous facility. It was a serious twist in events.
I think of all of the things you have to do as a manager or high level executive, the hardest thing to do is terminate hard working employees for reasons that had nothing to do with them. The only way to describe it is very simply that it stinks. The sole redemption for me was that I didn’t have to personally lay anyone off. It was still difficult as I had formed bonds with most of the employees, and I felt obligated to say goodbye to all of them. They were all pretty good spirited about their situation, but it was still tough knowing that we were letting them go, and they had to scramble to figure out where they were going to go and what they would do next.
We did give ourselves some breathing room as far as cash goes, but we would have to run DecisionPoint in a very Spartan manner. We could only spend money we absolutely had to spend, which meant that we could only spend money related to closing new customer business. Additionally, the DecisionPoint board decided that it was time to start looking for a new CEO. Our CEO did a fantastic job getting us off the ground, but he had limited experience in taking the business to the next level of growth, which was emphasized by how quickly we grew and then shrank again. The goal was to bring in a CEO that had the experience to take DecisionPoint to the next level.
Our current CEO continued on with his role in the company, and did his best to help us move forward. However, we were continuing to struggle in sales and cash was still dwindling. It was clear that we were headed for another round of layoffs regardless of what we did. Eventually, we made the decision to have the layoffs. Unlike last time, I actually had to lay off one of my employees this time. He was a great programmer, who really knew what he was doing and worked as hard as anyone could have asked. It was a painful discussion, and while he understood the reasons, it was still difficult to let him go. He had done everything I had asked and more. After my discussion with the employee and a post-layoff company meeting, I went home to spend some time by myself and contemplate what had happened. I felt absolutely horrible, and like I had let the employees down for not doing a better job with the rest of the management team to prevent what was happening. I still carry some guilt about that today. I look back and think about all of the things that could have been done or all of the different choices that could have been made. I know that you can’t change the past, but I was determined to examine the past and be able to use the lessons from the past as a guidance for how or how not to do things moving forward.
We were slowly skidding towards the end of DecisionPoint, but there was still time to make some changes and get going again, and that’s what we were determined to do.
Wednesday, April 28, 2010
Sunday, April 4, 2010
Chapter 4 - The Re-start Begins
I think one of the toughest things to do in business and in life is to restart something. You're headed in one direction, you face a situation you weren't expecting, and then you have to reset and try to move forward in a different direction. This was especially true for DecisionPoint. We spent a lot of time and effort pursuing the opportunity of being acquired. There was nothing else on our mind and we had no backup plan, which was a key mistake on our part. However, when the CEO of an acquiring company is also one of your angel investors, you tend to
assume that things would go in your favor. Ever since that event, the one thing that I tell other people involved in a startup is to always have a backup plan. Even in what seems to be the most certain situations, things happen, and you have to adjust and move on. It's a dilemma because you want to throw every ounce of your energy into a direction, and developing a backup plan can take away from that. It may seem like wasted time, but when things go wrong, nothing could be more important.
Like any re-start process, the re-start of DecisionPoint was far from smooth and easy. We had lost quite a few key employees, and those of us that were left were wondering what we should do and where we should go. I was one of those people, and it was a difficult time for me. As I said before, when the acquisition fell through, I sank into a pretty deep depression. Part of it was the shock of what happened, and the other part of it was that we didn't have a backup plan, so we all felt lost and confused. Another part of the equation was that my son was seven, my daughter was four, and my wife was doing day care part time out of our home. It was definitely not a time for career uncertainty for me. There was a lot of pressure all the way around, and it felt like the world was on my shoulders.
One of the only positive things that happened to me during the failed acquisition was an offer that was made. When the acquiring company backed out of the acquisition, they offered Sequent a lump sum of money if I left DecisionPoint, and joined the company that attempted to acquire us. It was the first time that a price tag was put on my head, and it was very flattering. However, there was no way I would accept an offer like that. First of all, I was bitter and how the acquisition process went, and felt that we had been screwed by specific individuals in the acquiring company. There was no way I was going to join that company only to keep working with those individuals. Second of all, I didn't want to get back into yet another big company. I left Sequent to start DecisionPoint, and going back to work for a big company with a lot of
politics and bureacracy was not my idea of my next career move. Obviously, there were a lot of people that tried to push me to take the deal. They stood to make a lot of money from it. However, I was the only one that had to deal with the long term consequences of joining that company. Everyone else got to walk away while I would be tied to that company for a long period of time. I must say that to the credit of Sequent and the CFO at Sequent, they did not push me to join the company that did not acquire us. Sequent stood to benefit the most from me joining that company, but at all levels within Sequent, there was support for me no matter what was decided. It was much appreciated, and helped me a lot in the decision making process.
The first part of the re-start process was logical, but involved more pain than I had ever experienced before. The entire DecisionPoint team was going to meet with the CFO at Sequent along with one of our angel investors to figure out how we would re-start DecisionPoint. I had heard rumors about how tough our angel investor could be, but I had never experienced it. He had a ton of respect for me and what I was doing, so we were always on pretty good terms from a relationship perspective. Also, we had to dust off our old plans and put together some assemblance of a plan of how we would start again. From an engineering perspective, this was pretty easy. We had a lot of options and a lot of things to get done. Plus, we still had customers that needed to be serviced, and there were plenty of things they wanted improved in the product. The sales and marketing plan was not as easy. When you shut down your entire sales and marketing operations for a couple of months, restarting them is difficult. We had to figure out how we wanted to move forward from a sales standpoint, and somehow manage to get back in touch with prospective customers that we had put on hold due to the acquisition process.
At this point, our CEO was no longer with us, so we didn't have a lot of leadership to drive the process. Additionally, the person he had brought on board to be the VP of Marketing decided that he wanted to go back to his marketing consulting business. The VP of Sales that the CEO brought on board decided he was going to stay and see what we could do and where we could go. He was really leading the effort to re-establish the sales and marketing plan. I was very glad for this because I had no idea what we should be doing in that area, and I had my hands full keeping an engineering team motivated and working on our next direction. The VP of Sales came up with a pretty standard plan for our industry. He was going to re-establish a global sales force to start selling the product, we would start contacting prospective customers that we put on hold, and our marketing plans would be designed to support the sales process. We wouldn't be doing anything bold and new in marketing until we closed a few more customer deals.
On the day of the re-start meeting, everyone gathered in a room at Sequent. This included everyone no matter what their role was in the company. We reviewed the engineering plans with the CFO of Sequent and our angel investor, and it all went pretty smoothly. It was pretty obvious what we needed to do, so I simply stated the obvious, and came away unscathed. Unfortunately, I could not say the same thing about our VP of Sales. He put up exactly one slide about how he was going to build out global sales teams and start to sell DecisionPoint again. There were not a lot of details behind how this would happen or how we would determine what sales people to hire, when, how, etc. Our angel investor did not like his lack of details or planning at all and was furious. In front of everyone, he looked at the VP of Sales and said ", I came up from the Bay Area to spend valuable time with the team, this is of no value to me. Sit down." At that point, we took a break to go the bathroom, etc. When we came back, the VP of Sales was gone. Never to be heard from again. There is debate to this day about whether the VP of Sales intentionally tried to upset our angel investor or not, but it happened. And let me tell you, it scared the rest of us to death. Engineers are not used to seeing things like that happen, and they were stunned, shocked, and scared. Deep down, we all knew what happened and why. However, to see it in such a direct manner was new to all of us. We did have a meeting later on to talk about it, but we all basically sat their in stunned silence. It would be a couple of days before we could recover from that episode and start to get back to the business of re-starting DecisionPoint.
From a re-start standpoint, we were still ok. We still had one sales person on board, a couple of customers, and an engineering plan that we were working on. We still weren't quite sure how we were going to move forward from a long term perspective, but that wasn't on our mind right away. We had immediate priorities that we had to deal with. In many ways, this was a good thing. We all wanted to get through the mechanics of re-starting DecisionPoint and get back to doing the things that we loved to do. There was uncertainty all the way around, but with everything else we had to be focused on, we didn't really worry about the uncertainty very much.
Shortly after the re-start process happened, we had a surprising event that none of us had expected. I can't recall all of the details, but somehow we had gotten in touch with a management team that specialized in taking over struggling companies and getting them re-started. The management team's focus was in the healthcare arena, but they started to take a deep interest in us and what we could do. The management team included a CEO, CFO, and VP of HR. They were all very talented, and even though they didn't know a lot about our industry, they really helped to get us organized and moving again. The intent was for them to come in, invest in DecisionPoint, and then assume their roles within the company. This was very much like an acquisition process in that they still needed to take a look at what we did, what the market was like, and whether they thought we could be salvaged. I must admit that I fell in love with this team immediately. My first acquisition experience was awful, so I was naturally skeptical this time around. However, even though this management team was very much going through an acquisition-like process, they immediately started to help us move forward. For example, the VP of HR helped us to attract, interview, and in some cases hire people. Everything they did helped us take steps in the right direction so that no matter what happened, DecisionPoint would somehow survive. I still remember these people by name, and have very positive thoughts when I think of them.
We got pretty far along the acquisition process, but like the first acquisition, this one fell through. The CEO that came in to help us had decided that in order to guarantee our success, he wanted to setup an exclusive relationship with the company that had attempted to acquire us, but backed out of it. The goal was that we would be the only endorsed data warehouse solution for that company's products. I think that I knew, deep down, that this would never happen. Having been through the acquisition process with that company, and having them turn their back on us to build something themselves was still at the forefront of my mind. I just couldn't see how they would agree to give us exclusivity. However, our acting CEO was a very sharp guy, and I figured if anyone could pull it off, he could.
After a lot of deliberation and debate the company that backed out of acquiring us decided they would not give us an exclusive relationship. Rather than drag on for months to make a decision, this decision came within a couple of weeks. However, without that exclusive agreement, there was no way the management team was going to stay with DecisionPoint and move us forward. I understood their position, and given what they had already done for us, I had no hard feelings about their decision. I was dissappointed because I thought they could really help us move forward, but it just wasn't in the cards. There were a couple of very positive events that did come out of the process, though. The CFO of the management team decided he wanted to stay on board with DecisionPoint. Additionally, he had brought in a very sharp financial controller and customer service manager to join the team. It was fresh blood in the organization, and breathed a new life into DecisionPoint. Us "old timers" were pleased with the new hires, and it showed us that Sequent was still committed to seeing us give it a go.
assume that things would go in your favor. Ever since that event, the one thing that I tell other people involved in a startup is to always have a backup plan. Even in what seems to be the most certain situations, things happen, and you have to adjust and move on. It's a dilemma because you want to throw every ounce of your energy into a direction, and developing a backup plan can take away from that. It may seem like wasted time, but when things go wrong, nothing could be more important.
Like any re-start process, the re-start of DecisionPoint was far from smooth and easy. We had lost quite a few key employees, and those of us that were left were wondering what we should do and where we should go. I was one of those people, and it was a difficult time for me. As I said before, when the acquisition fell through, I sank into a pretty deep depression. Part of it was the shock of what happened, and the other part of it was that we didn't have a backup plan, so we all felt lost and confused. Another part of the equation was that my son was seven, my daughter was four, and my wife was doing day care part time out of our home. It was definitely not a time for career uncertainty for me. There was a lot of pressure all the way around, and it felt like the world was on my shoulders.
One of the only positive things that happened to me during the failed acquisition was an offer that was made. When the acquiring company backed out of the acquisition, they offered Sequent a lump sum of money if I left DecisionPoint, and joined the company that attempted to acquire us. It was the first time that a price tag was put on my head, and it was very flattering. However, there was no way I would accept an offer like that. First of all, I was bitter and how the acquisition process went, and felt that we had been screwed by specific individuals in the acquiring company. There was no way I was going to join that company only to keep working with those individuals. Second of all, I didn't want to get back into yet another big company. I left Sequent to start DecisionPoint, and going back to work for a big company with a lot of
politics and bureacracy was not my idea of my next career move. Obviously, there were a lot of people that tried to push me to take the deal. They stood to make a lot of money from it. However, I was the only one that had to deal with the long term consequences of joining that company. Everyone else got to walk away while I would be tied to that company for a long period of time. I must say that to the credit of Sequent and the CFO at Sequent, they did not push me to join the company that did not acquire us. Sequent stood to benefit the most from me joining that company, but at all levels within Sequent, there was support for me no matter what was decided. It was much appreciated, and helped me a lot in the decision making process.
The first part of the re-start process was logical, but involved more pain than I had ever experienced before. The entire DecisionPoint team was going to meet with the CFO at Sequent along with one of our angel investors to figure out how we would re-start DecisionPoint. I had heard rumors about how tough our angel investor could be, but I had never experienced it. He had a ton of respect for me and what I was doing, so we were always on pretty good terms from a relationship perspective. Also, we had to dust off our old plans and put together some assemblance of a plan of how we would start again. From an engineering perspective, this was pretty easy. We had a lot of options and a lot of things to get done. Plus, we still had customers that needed to be serviced, and there were plenty of things they wanted improved in the product. The sales and marketing plan was not as easy. When you shut down your entire sales and marketing operations for a couple of months, restarting them is difficult. We had to figure out how we wanted to move forward from a sales standpoint, and somehow manage to get back in touch with prospective customers that we had put on hold due to the acquisition process.
At this point, our CEO was no longer with us, so we didn't have a lot of leadership to drive the process. Additionally, the person he had brought on board to be the VP of Marketing decided that he wanted to go back to his marketing consulting business. The VP of Sales that the CEO brought on board decided he was going to stay and see what we could do and where we could go. He was really leading the effort to re-establish the sales and marketing plan. I was very glad for this because I had no idea what we should be doing in that area, and I had my hands full keeping an engineering team motivated and working on our next direction. The VP of Sales came up with a pretty standard plan for our industry. He was going to re-establish a global sales force to start selling the product, we would start contacting prospective customers that we put on hold, and our marketing plans would be designed to support the sales process. We wouldn't be doing anything bold and new in marketing until we closed a few more customer deals.
On the day of the re-start meeting, everyone gathered in a room at Sequent. This included everyone no matter what their role was in the company. We reviewed the engineering plans with the CFO of Sequent and our angel investor, and it all went pretty smoothly. It was pretty obvious what we needed to do, so I simply stated the obvious, and came away unscathed. Unfortunately, I could not say the same thing about our VP of Sales. He put up exactly one slide about how he was going to build out global sales teams and start to sell DecisionPoint again. There were not a lot of details behind how this would happen or how we would determine what sales people to hire, when, how, etc. Our angel investor did not like his lack of details or planning at all and was furious. In front of everyone, he looked at the VP of Sales and said "
From a re-start standpoint, we were still ok. We still had one sales person on board, a couple of customers, and an engineering plan that we were working on. We still weren't quite sure how we were going to move forward from a long term perspective, but that wasn't on our mind right away. We had immediate priorities that we had to deal with. In many ways, this was a good thing. We all wanted to get through the mechanics of re-starting DecisionPoint and get back to doing the things that we loved to do. There was uncertainty all the way around, but with everything else we had to be focused on, we didn't really worry about the uncertainty very much.
Shortly after the re-start process happened, we had a surprising event that none of us had expected. I can't recall all of the details, but somehow we had gotten in touch with a management team that specialized in taking over struggling companies and getting them re-started. The management team's focus was in the healthcare arena, but they started to take a deep interest in us and what we could do. The management team included a CEO, CFO, and VP of HR. They were all very talented, and even though they didn't know a lot about our industry, they really helped to get us organized and moving again. The intent was for them to come in, invest in DecisionPoint, and then assume their roles within the company. This was very much like an acquisition process in that they still needed to take a look at what we did, what the market was like, and whether they thought we could be salvaged. I must admit that I fell in love with this team immediately. My first acquisition experience was awful, so I was naturally skeptical this time around. However, even though this management team was very much going through an acquisition-like process, they immediately started to help us move forward. For example, the VP of HR helped us to attract, interview, and in some cases hire people. Everything they did helped us take steps in the right direction so that no matter what happened, DecisionPoint would somehow survive. I still remember these people by name, and have very positive thoughts when I think of them.
We got pretty far along the acquisition process, but like the first acquisition, this one fell through. The CEO that came in to help us had decided that in order to guarantee our success, he wanted to setup an exclusive relationship with the company that had attempted to acquire us, but backed out of it. The goal was that we would be the only endorsed data warehouse solution for that company's products. I think that I knew, deep down, that this would never happen. Having been through the acquisition process with that company, and having them turn their back on us to build something themselves was still at the forefront of my mind. I just couldn't see how they would agree to give us exclusivity. However, our acting CEO was a very sharp guy, and I figured if anyone could pull it off, he could.
After a lot of deliberation and debate the company that backed out of acquiring us decided they would not give us an exclusive relationship. Rather than drag on for months to make a decision, this decision came within a couple of weeks. However, without that exclusive agreement, there was no way the management team was going to stay with DecisionPoint and move us forward. I understood their position, and given what they had already done for us, I had no hard feelings about their decision. I was dissappointed because I thought they could really help us move forward, but it just wasn't in the cards. There were a couple of very positive events that did come out of the process, though. The CFO of the management team decided he wanted to stay on board with DecisionPoint. Additionally, he had brought in a very sharp financial controller and customer service manager to join the team. It was fresh blood in the organization, and breathed a new life into DecisionPoint. Us "old timers" were pleased with the new hires, and it showed us that Sequent was still committed to seeing us give it a go.
Sunday, March 28, 2010
Chapter 3 – The Early Days
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.
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.
Monday, March 15, 2010
Chapter 2 - The Events Leading to DecisionPoint
The story of DecisionPoint actually begins long before the company was founded. In May of 1988, I joined a large computer hardware engineering and manufacturing company based in the Pacific Northwest, Sequent Computer Systems (Sequent). At the time, I was assigned to help support their ASK/MANMAN system along with some other tasks in their Information Technology group. Shortly after I joined Sequent, the decision had been made to transition from ASK/MANMAN to Oracle Applications, which was software designed to support the accounting and manufacturing processes within a company. Oracle Applications was under development at Oracle, and Sequent was acting as a partner and the first alpha/beta site in testing the Finance, Manufacturing, and Distribution components of Oracle Applications. I was literally the first technical person outside of Oracle to ever work with Oracle Applications. Between 1988 and 1990, Sequent implemented the General Ledger, Accounts Payable, and Fixed Assets modules of Oracle Applications. The other finance modules would not be implemented until Sequent was able to convert to Oracle Manufacturing. In April of 1991, Sequent implemented all of Oracle Financials, Distribution, and Manufacturing in a production environment using the “big bang” (turn everything on at once) implementation approach. As far as implementations go, everything went relatively smoothly. The process of testing the software and converting historical data was long and tedious, but we had an excellent team and excellent plan.
As a sidebar, I was also leveraged as a resource to the Sequent sales force. My role was to help them sell Sequent hardware to run Oracle Applications. I took my practical implementation experience, and shared it with potential customers. This included traveling around the world with minimal notice to help in a variety of sales situations. In one instance, I had one day’s notice that I was headed to Hamburg, Germany with no idea of when I would be coming home. At the time, our oldest child, Andrew, was barely two years old. This meant for quite the juggling act trying to keep a computer system alive within Sequent, traveling to help the Sequent sales force sell hardware, and manage staying connected to a young family. Somehow I made it work, and it paid off both professionally and personally.
From a personal perspective, I got nice raises, stock options, and worldwide recognition as an expert in my field. In one year, we were able to close $30 million worth of hardware sales related to Oracle Applications. On top of everything else, I was able to win the Sequent “Employee Excellence Award” twice. This award was given to non-commission based employees, and the person had to be nominated by their peers with final approval by management. I was most proud of these awards as they were from my co-workers, not necessarily management. My co-workers understood what I was up against in my juggling act, and did a fantastic job supporting me in my multiple roles.
Back to our main story…
One of the goals of Sequent’s CFO for implementing Oracle Applications was to have better and faster access to information. Better and faster access to information was not achieved by simply using new and improved reports within Oracle Applications, but rather the ability to take that data and perform higher levels of analysis. The reports within Oracle Applications were adequate for running the operations of Sequent, but there was not much available for users in upper management and at the executive level to make strategic business decisions and course corrections. While the technology of Oracle Applications was more open and flexible than the old ASK/MANMAN system, getting information out of Oracle Applications in a way that upper level management and executives needed to use it was still difficult.
I remember a conversation that I had with the CFO at Sequent at the time. We were in a meeting to discuss what his vision was for the type of access and analysis he would need to better run the business. He relayed a conversation that he had with Oracle about the topic. His comment to Oracle was “You promised me great and flexible access to all of data that I’ve never had access to, where is it?” Oracle’s response was “It’s in there…you have to figure out how to get it out…” I’m sure there was much more to the conversation than what he relayed to us in the meeting, but that kind of sums up Oracle’s answer at the time. At that point, Sequent’s CFO would make a decision that would significantly change the course of my career over the next several years.
In the winter of 1991, the CFO of Sequent tasked me with figuring out a way to get the information out of Oracle Applications into a “usable form”. When the CFO talked about usable, he would jokingly say “if it has more than one button, I won’t be able to use it.” That was definitely an exaggeration on his part, but what he really meant was that it had to be simple to use, while at the same time providing maximum access to information. Having him, or any other executive at Sequent, learn to login to Oracle Applications and run inquiries and reports was not the right answer. This would have meant that they would have to learn a complicated application that they wouldn’t use that often, and that would not provide data at the summarized level they were looking for.
Around the same time, Sequent was trying to change the way that it was doing business. Traditionally, Sequent sold computer hardware to large companies. They left the job of software delivery and implementation to the customer or to consultants that the customer was willing to hire. Sequent decided to change course a bit, and made a bet that they could get into the consulting business so that they not only delivered the hardware platform, but could also get into the business of software implementation on top of that platform. Along with this, Sequent began to invest in developing software that would be layered on top of the Sequent hardware to make the hardware platform and associated software easier to implement and manage. The goal was to deliver a targeted set of software and consulting services that would add value to any customer implementation of Sequent hardware.
Sequent decided to create an entire new division that was focused on software development and implementation. The goal of the new division was to be able to make decisions somewhat independently of Sequent’s traditional hardware business. Given that the new business was in software and implementation, Sequent’s existing processes around the hardware business would be insufficient. Therefore, the new division was formed to focus on this new direction. Within the division, there were four primary areas that Sequent wanted to focus on. These were all areas that Sequent had strong existing expertise in.
The first area was an area known as enterprise architecture. Up until this point, Sequent customers would acquire the hardware platform, and then independently implement different software solutions on that hardware platform. Over the years, many customers had acquired multiple hardware platforms and software solutions. The goal of the enterprise architecture group was to help the customer come up with an overall strategy on how to manage all the different platforms and software solutions, and then produce a roadmap for how the customer should move forward when it came to future implementations. The goal was to get the customer out of the mentality of simply acquiring a new hardware platform every time they wanted to do something new, and get them into a mentality of acquiring the hardware with the goal of simplifying their computing environment in order to make it easier to manage.
The second area was targeted around online transaction processing (OLTP) applications. These applications had traditionally been the bread and butter of Sequent’s business. The Sequent hardware platform was outstanding at supporting hundreds or thousands of users entering specific transactions. When I say specific transactions, think of something as simple as entering a vendor invoice or purchase order. Part of this area of the business involved Oracle Applications, which Sequent’s IT team had deep experience working with. In this area, Sequent was not necessarily going to deliver any software. That was already handled by the software vendors. However, what Sequent could do was take the rich experience and knowledge that they had gained from implementing Oracle Applications internally, and building a consulting service that could help customers do the same type of implementation.
The third area was targeted around systems management. Similar to the situation for enterprise architecture, when a customer acquired new Sequent hardware, they would simply plug it in next to the existing hardware, install the software, and let end users begin using it. The problem was that each hardware platform was managed independently of the other hardware platforms. If a customer had ten Sequent computers, they would have to login to each system separately, and setup things like backup, etc. Sequent’s goal was to partner with existing software companies and build some of their own software to be able to manage the hardware platforms from a single location. Rather than login to each server, there would be a central console that would manage all the servers. So, if you setup something like backup on one of the computers, you could easily deploy that to the other computers in the environment without having to login to each one and do the same thing over and over again.
The fourth, and final, area was targeted around data warehousing. Up until this point in time, the data warehousing market was largely dominated by companies like Teradata and IBM. As described before, conceptually, data warehousing represents the consolidation of large quantities of data (millions or billions of transactions) to make it easier for end user to analyze the data for making strategic business decisions. Sequent was beginning to get into the data warehousing space because companies like Oracle and Informix (now part of IBM) started to make their software better able to handle the quantities of data required by a data warehouse implementation running on the Sequent hardware platform. Sequent had performed a couple of successful data warehouse implementations for different customers, and wanted to take that experience and knowledge to help other customers deliver data warehouse solutions to their end users.
Of all of the areas that Sequent was about to get into, data warehousing was probably the most promising as far as future business growth. It was a new market that Sequent was having early success in, and more importantly, it required very large Sequent hardware platforms to deploy the size of data warehouses that the customers needed. The other areas would drive moderate growth in the sales of hardware platforms and services, but if done correctly, the data warehouse area would represent the largest potential for growth. In many ways, it represented the future of where Sequent would draw most of its revenue from.
Because data warehousing represented the “next big thing” for Sequent, a lot expertise in building data warehouses and working with data warehousing technologies was developed. With my new project of implementing a data warehouse for use internally at Sequent, I was able to tap into great sources of expertise, and leverage it to help me design and build a data warehouse for Sequent that contained finance related data (General Ledger, Accounts Payable, Fixed Assets, Accounts Receivable, Order Management, and Purchasing) coming from the Oracle Applications installation. At the time, there were a lot of moving pieces in the data warehousing market. There was a whole new set of rapidly changing technologies, philosophies, and implementation methodologies. Without having to blaze the trail myself, I could leverage the collective expertise of data warehousing knowledge within Sequent to figure out the best way to move forward. It definitely made my job easier as I could focus on the implementation rather than trying to chase down and experiment with the latest and greatest new technology fad.
Rather than go through the details of each decision I made, we ended up implementing a data warehouse on top of the Oracle RDBMS running on a Sequent platform. These choices were easy because they were both technologies that we had experience with. We did experiment with one other database technology called Redbrick at the time, but we had no experience with it, and it would have represented significant changes to Sequent’s internal IT environment. At the time, there was no budget for additional software or IT resources to support the software, so we went with Oracle. As far as end user access to the data, we went with two different sets of tools. The first tool was Pilot Lightship, and was classified as an executive information system (EIS) tool. Its job was to provide summarized data to Sequent executives in a very easy to use format. All of the questions that executives wanted to ask were predefined, so it was a bit inflexible, but it was extremely easy to use in that most interaction involved a single click of the mouse. The second tool was called Clear Access and was designed for adhoc access to the data. Users could literally build a query to answer any question that they wanted, but it was somewhat difficult to use, and required that the user had pretty intimate knowledge of database tables and columns. It should be noted that both tools would be considered sub-standard in today’s world of data warehousing, but at the time, they were state of the art.
In the winter of 1992, I delivered the data warehouse to end users, including executives, cost center managers, sales management, and financial controllers. As stated above, the data warehouse was built on top of an Oracle database using a home grown Extract-Transform-Load (ETL) to extract data from Oracle Applications and load it into the data warehouse. The majority of the end users were given access to the data through Pilot Lightship with just a couple that had access through Clear Access.
There were some bumps in the road during the implementation as end users were uncertain of the accuracy of the data. It turned out that some of the revenue information could not simply be extracted from the source system due to the way that Sequent accounted for revenue in their international division. Sequent’s process was for headquarters to build, ship, and invoice the Sequent subsidiary in another country for the hardware, and then the Sequent subsidiary would ship and bill the end customer. There was limited correlation between the revenue information in the Sequent headquarters system and revenue coming from Sequent’s systems supporting the subsidiaries. We eventually had to build a series of complicated processes to merge the data, which included a couple of screens that allowed specific end users to make changes to how some of the data was merged. We worked through those issues, and eventually got the end users to sign off on the accuracy of the data.
Because Sequent was a beta site for Oracle Applications, Sequent would actively host Oracle’s prospective customers and do references for Oracle Applications. These were sit down Q&A sessions where individuals within prospective Oracle Applications customers could sit down with someone within Sequent who was equivalent to them in position, and talk about how their job would change, etc. These were typically all day sessions with separate meetings and breakout sessions. The Oracle Applications prospective customers were facing significant changes in how they would end up running their business, and Sequent was a good resource to help them talk about and work through the changes.
The Sequent CFO was very proud of what we were able to accomplish with the data warehouse I had built, and the types of access he had to information. Therefore, during the executive sessions of these meetings, the CFO of Sequent would proudly show the data warehouse environment that he was using. Given that the prospects we were talking to would be new Oracle Applications customers, when we talked about the data warehouse, we talked in terms of the types of things that you could do with the data after you implemented Oracle Applications. It was clear to the visiting executives that implementing Oracle Applications could help them springboard into other technologies, like data warehousing. As a result, almost every visitor that saw our data warehouse implementation would comment to the CFO that if they bought Oracle Applications, they wondered if they could also “buy” the data warehouse environment that I had created.
Over time, given the interest level of prospective Oracle Applications customers, and the fact that Sequent was making a big push into the data warehousing market, it was clear that if we could turn the data warehouse I had built into a commercially available piece of software, there was a market for it. Sequent’s CFO and I talked, frequently, about the possibility of Sequent branching out into the applications software market with the data warehouse solution. However, it was not an easy thing to do within Sequent. While Sequent was starting to get into the software market, it was strictly around tools and utilities to make the Sequent hardware platform easier to implement and manage. There were never any discussions or plans around application software. If we were to do this, we would have to try and accomplish it with minimal impact to the rest of Sequent’s organization. This would prove to be difficult for many reasons as delivering application software was much different than what Sequent had traditionally done.
Eventually, in early 1994, and as more prospective Oracle Applications customers came through Sequent, the interest in our data warehousing solution became much higher. Sequent was ready for us to break out into our own small team and start an applications software division within Sequent. In the spring of 1994, through a series of events, the CFO of Sequent decided to assign me to take the internal data warehouse (very specific to Sequent) and a small engineering team, and turn it into a solution that Sequent could sell as a product offering. The product offering would be called DecisionPoint. There were a lot of peaks and valleys in the process because we were very different from Sequent’s traditional business model and delivery mechanism. However, after approximately a six month development effort, we had completed turning the internal data warehouse solution into a product that would auto configure to support any implementation of Oracle Applications at any customer site.
On the sales front, we had a great start even though DecisionPoint represented a new software offering from a hardware company that had limited experience developing application software. We sold the DecisionPoint product to three different companies (two in the US and one in Australia) within the first three months the solution was available to customers. At the time, Sequent did have a consulting staff, but most of the consultants were familiar with hardware and database technology, not application software in the data warehouse market. More specifically, very few of them had experience working with application software like DecisionPoint, so even though we provided some training on our software, I spent a lot of time traveling between our US customers making sure that everything went smoothly. Our resource in Australia turned out to be quite a find, and with some support from our engineering team, she was able to implement DecisionPoint without any of us having to travel there. Overall, while the implementations were a bit painful, they were successful and the solution was used at each of the customer sites. It was a better start than any of us could have imagined.
One of our biggest challenges from a sales perspective was that given that almost all of Sequent’s sales were related to computer hardware, the sales force had a difficult time selling a software solution like DecisionPoint beyond the three initial customers. There were a lot of different factors that caused the lack of sales. However, I believe that at the end of the day, the biggest factor to the lack of sales had to do with DecisionPoint being a small software offering in what was predominantly a hardware company. A sales rep would have to sell ten copies of our software to make the same commission as they would get in selling one hardware platform. The odds were definitely not in our favor.
In spite of the lack of sales, the engineering team continued to improve the product and deliver new features to the existing customers. I was able to shield the engineers from the ups and downs of the sales process so that they could stay focused on getting our product releases out on time. At times, it felt much like combat where the opposition would throw a grenade, and I would jump on it to protect the engineers from getting injured or killed. It was definitely a learning experience that I still carry scars from today.
After a lot of thought and deliberation by DecisionPoint team members and the CFO at Sequent, who was our chief sponsor within the organization, it was decided that being a software group within a hardware company was detrimental to maximizing our potential. What we really needed was to be able to be independent of Sequent so that we could branch out on our own, and pursue the options we needed to pursue, like porting our solution to non-Sequent hardware platforms. We began to investigate what it would take for us to become our own entity, and be free from the restrictions we were under at Sequent.
As a sidebar, I was also leveraged as a resource to the Sequent sales force. My role was to help them sell Sequent hardware to run Oracle Applications. I took my practical implementation experience, and shared it with potential customers. This included traveling around the world with minimal notice to help in a variety of sales situations. In one instance, I had one day’s notice that I was headed to Hamburg, Germany with no idea of when I would be coming home. At the time, our oldest child, Andrew, was barely two years old. This meant for quite the juggling act trying to keep a computer system alive within Sequent, traveling to help the Sequent sales force sell hardware, and manage staying connected to a young family. Somehow I made it work, and it paid off both professionally and personally.
From a personal perspective, I got nice raises, stock options, and worldwide recognition as an expert in my field. In one year, we were able to close $30 million worth of hardware sales related to Oracle Applications. On top of everything else, I was able to win the Sequent “Employee Excellence Award” twice. This award was given to non-commission based employees, and the person had to be nominated by their peers with final approval by management. I was most proud of these awards as they were from my co-workers, not necessarily management. My co-workers understood what I was up against in my juggling act, and did a fantastic job supporting me in my multiple roles.
Back to our main story…
One of the goals of Sequent’s CFO for implementing Oracle Applications was to have better and faster access to information. Better and faster access to information was not achieved by simply using new and improved reports within Oracle Applications, but rather the ability to take that data and perform higher levels of analysis. The reports within Oracle Applications were adequate for running the operations of Sequent, but there was not much available for users in upper management and at the executive level to make strategic business decisions and course corrections. While the technology of Oracle Applications was more open and flexible than the old ASK/MANMAN system, getting information out of Oracle Applications in a way that upper level management and executives needed to use it was still difficult.
I remember a conversation that I had with the CFO at Sequent at the time. We were in a meeting to discuss what his vision was for the type of access and analysis he would need to better run the business. He relayed a conversation that he had with Oracle about the topic. His comment to Oracle was “You promised me great and flexible access to all of data that I’ve never had access to, where is it?” Oracle’s response was “It’s in there…you have to figure out how to get it out…” I’m sure there was much more to the conversation than what he relayed to us in the meeting, but that kind of sums up Oracle’s answer at the time. At that point, Sequent’s CFO would make a decision that would significantly change the course of my career over the next several years.
In the winter of 1991, the CFO of Sequent tasked me with figuring out a way to get the information out of Oracle Applications into a “usable form”. When the CFO talked about usable, he would jokingly say “if it has more than one button, I won’t be able to use it.” That was definitely an exaggeration on his part, but what he really meant was that it had to be simple to use, while at the same time providing maximum access to information. Having him, or any other executive at Sequent, learn to login to Oracle Applications and run inquiries and reports was not the right answer. This would have meant that they would have to learn a complicated application that they wouldn’t use that often, and that would not provide data at the summarized level they were looking for.
Around the same time, Sequent was trying to change the way that it was doing business. Traditionally, Sequent sold computer hardware to large companies. They left the job of software delivery and implementation to the customer or to consultants that the customer was willing to hire. Sequent decided to change course a bit, and made a bet that they could get into the consulting business so that they not only delivered the hardware platform, but could also get into the business of software implementation on top of that platform. Along with this, Sequent began to invest in developing software that would be layered on top of the Sequent hardware to make the hardware platform and associated software easier to implement and manage. The goal was to deliver a targeted set of software and consulting services that would add value to any customer implementation of Sequent hardware.
Sequent decided to create an entire new division that was focused on software development and implementation. The goal of the new division was to be able to make decisions somewhat independently of Sequent’s traditional hardware business. Given that the new business was in software and implementation, Sequent’s existing processes around the hardware business would be insufficient. Therefore, the new division was formed to focus on this new direction. Within the division, there were four primary areas that Sequent wanted to focus on. These were all areas that Sequent had strong existing expertise in.
The first area was an area known as enterprise architecture. Up until this point, Sequent customers would acquire the hardware platform, and then independently implement different software solutions on that hardware platform. Over the years, many customers had acquired multiple hardware platforms and software solutions. The goal of the enterprise architecture group was to help the customer come up with an overall strategy on how to manage all the different platforms and software solutions, and then produce a roadmap for how the customer should move forward when it came to future implementations. The goal was to get the customer out of the mentality of simply acquiring a new hardware platform every time they wanted to do something new, and get them into a mentality of acquiring the hardware with the goal of simplifying their computing environment in order to make it easier to manage.
The second area was targeted around online transaction processing (OLTP) applications. These applications had traditionally been the bread and butter of Sequent’s business. The Sequent hardware platform was outstanding at supporting hundreds or thousands of users entering specific transactions. When I say specific transactions, think of something as simple as entering a vendor invoice or purchase order. Part of this area of the business involved Oracle Applications, which Sequent’s IT team had deep experience working with. In this area, Sequent was not necessarily going to deliver any software. That was already handled by the software vendors. However, what Sequent could do was take the rich experience and knowledge that they had gained from implementing Oracle Applications internally, and building a consulting service that could help customers do the same type of implementation.
The third area was targeted around systems management. Similar to the situation for enterprise architecture, when a customer acquired new Sequent hardware, they would simply plug it in next to the existing hardware, install the software, and let end users begin using it. The problem was that each hardware platform was managed independently of the other hardware platforms. If a customer had ten Sequent computers, they would have to login to each system separately, and setup things like backup, etc. Sequent’s goal was to partner with existing software companies and build some of their own software to be able to manage the hardware platforms from a single location. Rather than login to each server, there would be a central console that would manage all the servers. So, if you setup something like backup on one of the computers, you could easily deploy that to the other computers in the environment without having to login to each one and do the same thing over and over again.
The fourth, and final, area was targeted around data warehousing. Up until this point in time, the data warehousing market was largely dominated by companies like Teradata and IBM. As described before, conceptually, data warehousing represents the consolidation of large quantities of data (millions or billions of transactions) to make it easier for end user to analyze the data for making strategic business decisions. Sequent was beginning to get into the data warehousing space because companies like Oracle and Informix (now part of IBM) started to make their software better able to handle the quantities of data required by a data warehouse implementation running on the Sequent hardware platform. Sequent had performed a couple of successful data warehouse implementations for different customers, and wanted to take that experience and knowledge to help other customers deliver data warehouse solutions to their end users.
Of all of the areas that Sequent was about to get into, data warehousing was probably the most promising as far as future business growth. It was a new market that Sequent was having early success in, and more importantly, it required very large Sequent hardware platforms to deploy the size of data warehouses that the customers needed. The other areas would drive moderate growth in the sales of hardware platforms and services, but if done correctly, the data warehouse area would represent the largest potential for growth. In many ways, it represented the future of where Sequent would draw most of its revenue from.
Because data warehousing represented the “next big thing” for Sequent, a lot expertise in building data warehouses and working with data warehousing technologies was developed. With my new project of implementing a data warehouse for use internally at Sequent, I was able to tap into great sources of expertise, and leverage it to help me design and build a data warehouse for Sequent that contained finance related data (General Ledger, Accounts Payable, Fixed Assets, Accounts Receivable, Order Management, and Purchasing) coming from the Oracle Applications installation. At the time, there were a lot of moving pieces in the data warehousing market. There was a whole new set of rapidly changing technologies, philosophies, and implementation methodologies. Without having to blaze the trail myself, I could leverage the collective expertise of data warehousing knowledge within Sequent to figure out the best way to move forward. It definitely made my job easier as I could focus on the implementation rather than trying to chase down and experiment with the latest and greatest new technology fad.
Rather than go through the details of each decision I made, we ended up implementing a data warehouse on top of the Oracle RDBMS running on a Sequent platform. These choices were easy because they were both technologies that we had experience with. We did experiment with one other database technology called Redbrick at the time, but we had no experience with it, and it would have represented significant changes to Sequent’s internal IT environment. At the time, there was no budget for additional software or IT resources to support the software, so we went with Oracle. As far as end user access to the data, we went with two different sets of tools. The first tool was Pilot Lightship, and was classified as an executive information system (EIS) tool. Its job was to provide summarized data to Sequent executives in a very easy to use format. All of the questions that executives wanted to ask were predefined, so it was a bit inflexible, but it was extremely easy to use in that most interaction involved a single click of the mouse. The second tool was called Clear Access and was designed for adhoc access to the data. Users could literally build a query to answer any question that they wanted, but it was somewhat difficult to use, and required that the user had pretty intimate knowledge of database tables and columns. It should be noted that both tools would be considered sub-standard in today’s world of data warehousing, but at the time, they were state of the art.
In the winter of 1992, I delivered the data warehouse to end users, including executives, cost center managers, sales management, and financial controllers. As stated above, the data warehouse was built on top of an Oracle database using a home grown Extract-Transform-Load (ETL) to extract data from Oracle Applications and load it into the data warehouse. The majority of the end users were given access to the data through Pilot Lightship with just a couple that had access through Clear Access.
There were some bumps in the road during the implementation as end users were uncertain of the accuracy of the data. It turned out that some of the revenue information could not simply be extracted from the source system due to the way that Sequent accounted for revenue in their international division. Sequent’s process was for headquarters to build, ship, and invoice the Sequent subsidiary in another country for the hardware, and then the Sequent subsidiary would ship and bill the end customer. There was limited correlation between the revenue information in the Sequent headquarters system and revenue coming from Sequent’s systems supporting the subsidiaries. We eventually had to build a series of complicated processes to merge the data, which included a couple of screens that allowed specific end users to make changes to how some of the data was merged. We worked through those issues, and eventually got the end users to sign off on the accuracy of the data.
Because Sequent was a beta site for Oracle Applications, Sequent would actively host Oracle’s prospective customers and do references for Oracle Applications. These were sit down Q&A sessions where individuals within prospective Oracle Applications customers could sit down with someone within Sequent who was equivalent to them in position, and talk about how their job would change, etc. These were typically all day sessions with separate meetings and breakout sessions. The Oracle Applications prospective customers were facing significant changes in how they would end up running their business, and Sequent was a good resource to help them talk about and work through the changes.
The Sequent CFO was very proud of what we were able to accomplish with the data warehouse I had built, and the types of access he had to information. Therefore, during the executive sessions of these meetings, the CFO of Sequent would proudly show the data warehouse environment that he was using. Given that the prospects we were talking to would be new Oracle Applications customers, when we talked about the data warehouse, we talked in terms of the types of things that you could do with the data after you implemented Oracle Applications. It was clear to the visiting executives that implementing Oracle Applications could help them springboard into other technologies, like data warehousing. As a result, almost every visitor that saw our data warehouse implementation would comment to the CFO that if they bought Oracle Applications, they wondered if they could also “buy” the data warehouse environment that I had created.
Over time, given the interest level of prospective Oracle Applications customers, and the fact that Sequent was making a big push into the data warehousing market, it was clear that if we could turn the data warehouse I had built into a commercially available piece of software, there was a market for it. Sequent’s CFO and I talked, frequently, about the possibility of Sequent branching out into the applications software market with the data warehouse solution. However, it was not an easy thing to do within Sequent. While Sequent was starting to get into the software market, it was strictly around tools and utilities to make the Sequent hardware platform easier to implement and manage. There were never any discussions or plans around application software. If we were to do this, we would have to try and accomplish it with minimal impact to the rest of Sequent’s organization. This would prove to be difficult for many reasons as delivering application software was much different than what Sequent had traditionally done.
Eventually, in early 1994, and as more prospective Oracle Applications customers came through Sequent, the interest in our data warehousing solution became much higher. Sequent was ready for us to break out into our own small team and start an applications software division within Sequent. In the spring of 1994, through a series of events, the CFO of Sequent decided to assign me to take the internal data warehouse (very specific to Sequent) and a small engineering team, and turn it into a solution that Sequent could sell as a product offering. The product offering would be called DecisionPoint. There were a lot of peaks and valleys in the process because we were very different from Sequent’s traditional business model and delivery mechanism. However, after approximately a six month development effort, we had completed turning the internal data warehouse solution into a product that would auto configure to support any implementation of Oracle Applications at any customer site.
On the sales front, we had a great start even though DecisionPoint represented a new software offering from a hardware company that had limited experience developing application software. We sold the DecisionPoint product to three different companies (two in the US and one in Australia) within the first three months the solution was available to customers. At the time, Sequent did have a consulting staff, but most of the consultants were familiar with hardware and database technology, not application software in the data warehouse market. More specifically, very few of them had experience working with application software like DecisionPoint, so even though we provided some training on our software, I spent a lot of time traveling between our US customers making sure that everything went smoothly. Our resource in Australia turned out to be quite a find, and with some support from our engineering team, she was able to implement DecisionPoint without any of us having to travel there. Overall, while the implementations were a bit painful, they were successful and the solution was used at each of the customer sites. It was a better start than any of us could have imagined.
One of our biggest challenges from a sales perspective was that given that almost all of Sequent’s sales were related to computer hardware, the sales force had a difficult time selling a software solution like DecisionPoint beyond the three initial customers. There were a lot of different factors that caused the lack of sales. However, I believe that at the end of the day, the biggest factor to the lack of sales had to do with DecisionPoint being a small software offering in what was predominantly a hardware company. A sales rep would have to sell ten copies of our software to make the same commission as they would get in selling one hardware platform. The odds were definitely not in our favor.
In spite of the lack of sales, the engineering team continued to improve the product and deliver new features to the existing customers. I was able to shield the engineers from the ups and downs of the sales process so that they could stay focused on getting our product releases out on time. At times, it felt much like combat where the opposition would throw a grenade, and I would jump on it to protect the engineers from getting injured or killed. It was definitely a learning experience that I still carry scars from today.
After a lot of thought and deliberation by DecisionPoint team members and the CFO at Sequent, who was our chief sponsor within the organization, it was decided that being a software group within a hardware company was detrimental to maximizing our potential. What we really needed was to be able to be independent of Sequent so that we could branch out on our own, and pursue the options we needed to pursue, like porting our solution to non-Sequent hardware platforms. We began to investigate what it would take for us to become our own entity, and be free from the restrictions we were under at Sequent.
Sunday, March 14, 2010
Chapter 1 – The DecisionPoint Solution
In order to fully understand some of the later discussions in this book, it is important to have a basic understanding of the problem that DecisionPoint was trying to solve. DecisionPoint represented a series of software and consulting processes to automate the analysis of financial information for large corporations. Overly simplified, DecisionPoint can be compared to the reporting capabilities of Quicken. In Quicken, you manage your checkbook and bank accounts to pay your bills. There is also a reporting capability that allows you to see where you’re spending your money, what categories, etc. DecisionPoint was designed to provide very similar capabilities for large corporations, but on a much bigger scale. For example, DecisionPoint could take financial information from multiple systems running in multiple countries and consolidate that information for the customer so that employees of the customer could perform complex analysis on that information in one place without having to go back to the source systems. This would, hopefully, lead to better decisions about what direction the business should go.
DecisionPoint was in what is known as the data warehousing market within the computer technology market. When you simplify the meaning, data warehousing is the ability to take very large quantities of data from many different sources, and assemble it in a central location that is fast and easy for non-technical people to access and make decisions. From a personal perspective, picture it like doing your monthly finances. You have your pay check along with your typical monthly expenditures. You use this information to decide what bills to pay, how much money is left over, and what you want to do with the left over money. Now picture that same situation for millions of people that have to make the same decisions. There are millions of people accessing millions of pieces of information with minimal knowledge of how to use a computer other than a home PC. That’s pretty much what a data warehouse is like. It involves a lot of people looking through a lot of data to try and figure out what to do next.
As an example, a data warehouse in a grocery store is something that most everyone can relate to. You go into a grocery store to buy a lot of different products including food, beverages, bathroom supplies, and many other items that you use in your home. Each time you go to the grocery store, they scan the products that you intend to purchase. When you initially look at the scanning process, you fundamentally believe that the primary purpose of scanning is to help determine how much a product costs, and therefore, how much you pay for it. While this is the fundamental purpose, there are other things that go on behind the scenes that you never see. In addition to scanning products for price, the grocery store also tries to track the frequency at which products are purchased, and what products are typically purchased together. For example, in the summer, you may find that not only do people purchase a lot of steaks for grilling, but when they do so, they also buy other supplies such as steak sauce, meat tenderizer, even things like charcoal for the grill. The goal of knowing this information is two fold. First, the grocery store wants to track what items are purchased frequently at what time of year. This helps them to determine what products and quantities of those products they need to have in the store to make sure they have enough supply for everyone that comes to buy those products. Second, the grocery store also knows what products are typically purchased at the same time. This may lead them to place the items closer together in the store to make it easier for shoppers to find. In our steak example, a store might choose to put the steak sauce, and even possibly the charcoal near the butcher section making it easier for shoppers to find the products most closely related to steak and how people choose to cook it.
Now you may ask what this has to do with data warehousing. As you might notice when you go to the grocery store at a busy time, there may be hundreds of shoppers in the store. Additionally, there are literally thousands of products that those shoppers can buy. In any given day, a grocery store may scan literally millions of product transactions. Imagine having to sort through the scanned data by hand trying to determine the most frequently purchased products along with trying to correlate what products are commonly purchased at the same time. This is an exercise that could take weeks to do by hand for just one day’s volume of transactions. The role of the data warehouse is to use a computer to take all of those scanned transactions, and organize them in a way that the manager of the grocery store can quickly determine, with the press of a button and in a matter of seconds, the most frequently purchased products for a day, week, month, season, or year. So, literally in seconds, the grocery store manager knows what products to order for what time of year. Additionally, with the press of a button, the store manager can correlate what products are frequently sold together, which may help them to determine where to place products on the shelves to make it easier for shoppers to find them.
Fundamentally, the goal for the data warehouse for a grocery store is to sort through what has been bought, and allow the manager to ask both basic and complex questions to help them more effectively manage the store with the goal of selling more products to more people. A data warehouse can apply to more than just a grocery store.
Some other examples of the usage of data warehousing to enhance business opportunities include:
• Cell phone companies analyzing call and call volume data to determine new
and different programs they can offer to their customers
• Manufacturing companies analyzing what they buy and who they buy it from to
determine if there are any products or vendors they should negotiate to
obtain discounts on future purchases.
• Retailers that analyze product purchases to be able to advertise and send
coupons to offer discounts to customers on frequently purchased items.
• Companies that collect and analyze their travel expenses to determine where
employees are traveling and what it is costing the company. This can help
to determine most frequently used airlines, hotels, car rental companies,
etc. so that the company can negotiate volume discount with those vendors.
There are many other situations where a data warehouse can be used, and these are just some cursory examples to help you see the possibilities when using this type of technology.
DecisionPoint was in what is known as the data warehousing market within the computer technology market. When you simplify the meaning, data warehousing is the ability to take very large quantities of data from many different sources, and assemble it in a central location that is fast and easy for non-technical people to access and make decisions. From a personal perspective, picture it like doing your monthly finances. You have your pay check along with your typical monthly expenditures. You use this information to decide what bills to pay, how much money is left over, and what you want to do with the left over money. Now picture that same situation for millions of people that have to make the same decisions. There are millions of people accessing millions of pieces of information with minimal knowledge of how to use a computer other than a home PC. That’s pretty much what a data warehouse is like. It involves a lot of people looking through a lot of data to try and figure out what to do next.
As an example, a data warehouse in a grocery store is something that most everyone can relate to. You go into a grocery store to buy a lot of different products including food, beverages, bathroom supplies, and many other items that you use in your home. Each time you go to the grocery store, they scan the products that you intend to purchase. When you initially look at the scanning process, you fundamentally believe that the primary purpose of scanning is to help determine how much a product costs, and therefore, how much you pay for it. While this is the fundamental purpose, there are other things that go on behind the scenes that you never see. In addition to scanning products for price, the grocery store also tries to track the frequency at which products are purchased, and what products are typically purchased together. For example, in the summer, you may find that not only do people purchase a lot of steaks for grilling, but when they do so, they also buy other supplies such as steak sauce, meat tenderizer, even things like charcoal for the grill. The goal of knowing this information is two fold. First, the grocery store wants to track what items are purchased frequently at what time of year. This helps them to determine what products and quantities of those products they need to have in the store to make sure they have enough supply for everyone that comes to buy those products. Second, the grocery store also knows what products are typically purchased at the same time. This may lead them to place the items closer together in the store to make it easier for shoppers to find. In our steak example, a store might choose to put the steak sauce, and even possibly the charcoal near the butcher section making it easier for shoppers to find the products most closely related to steak and how people choose to cook it.
Now you may ask what this has to do with data warehousing. As you might notice when you go to the grocery store at a busy time, there may be hundreds of shoppers in the store. Additionally, there are literally thousands of products that those shoppers can buy. In any given day, a grocery store may scan literally millions of product transactions. Imagine having to sort through the scanned data by hand trying to determine the most frequently purchased products along with trying to correlate what products are commonly purchased at the same time. This is an exercise that could take weeks to do by hand for just one day’s volume of transactions. The role of the data warehouse is to use a computer to take all of those scanned transactions, and organize them in a way that the manager of the grocery store can quickly determine, with the press of a button and in a matter of seconds, the most frequently purchased products for a day, week, month, season, or year. So, literally in seconds, the grocery store manager knows what products to order for what time of year. Additionally, with the press of a button, the store manager can correlate what products are frequently sold together, which may help them to determine where to place products on the shelves to make it easier for shoppers to find them.
Fundamentally, the goal for the data warehouse for a grocery store is to sort through what has been bought, and allow the manager to ask both basic and complex questions to help them more effectively manage the store with the goal of selling more products to more people. A data warehouse can apply to more than just a grocery store.
Some other examples of the usage of data warehousing to enhance business opportunities include:
• Cell phone companies analyzing call and call volume data to determine new
and different programs they can offer to their customers
• Manufacturing companies analyzing what they buy and who they buy it from to
determine if there are any products or vendors they should negotiate to
obtain discounts on future purchases.
• Retailers that analyze product purchases to be able to advertise and send
coupons to offer discounts to customers on frequently purchased items.
• Companies that collect and analyze their travel expenses to determine where
employees are traveling and what it is costing the company. This can help
to determine most frequently used airlines, hotels, car rental companies,
etc. so that the company can negotiate volume discount with those vendors.
There are many other situations where a data warehouse can be used, and these are just some cursory examples to help you see the possibilities when using this type of technology.
Preface
People get involved in startups for a variety of reasons with many different goals. It usually starts with a good idea that someone is passionate about. However, deep down, I believe that many people that get into startups are looking for fame and fortune. What drives and motivates individuals is that recognition or money that you were unable to achieve when you worked for a larger organization. The goal is to get out from under the stifling environment of a larger company and be able to do something with a new freedom and flair that you couldn’t otherwise try.
When I think back about what motivated me, there were a lot of factors. At the time, I was working for Sequent Computer Systems, which was a large computer hardware manufacturing company that was eventually acquired by IBM. I started with Sequent as an information technology resource, employee number five hundred. Because of Sequent’s size, there were many opportunities for individual growth and reward, and I certainly took advantage of those opportunities. My specialty was getting finance and accounting software, known as Oracle Applications, to run fast on the Sequent hardware platform. While my primary function was an internal resource, supporting Sequent’s internal implementation of Oracle Applications, I also spent a lot of my time traveling to customer sites to help them do what we had done at Sequent. Additionally, I spent a lot of time traveling around the world to help sell Sequent hardware for customers that wanted to run Oracle Applications.
Like any other company in the hardware technology market, there was a lot of risk, but also a lot of reward. Between stock options, bonuses, salary increases, and even two employee excellence awards that involved very nice vacations for my wife and I, I had done well for myself. I had a fantastic reputation and a good career. On top of that, I had a great family, which included a wife and two young children. However, even with all of that, I kept having the feeling that there was something missing. From a career perspective, I wanted more. Sequent had grown a lot in my time there, and I had moved on from being an information technology resource to being more focused on helping Sequent’s sales force sell more Sequent hardware. As Sequent grew, like any company, it began to lose the qualities of a company that I enjoyed. There was less freedom, more rules, and more bureaucracy. As many will tell you, I’m not the best bureaucrat, and I’m too honest and blunt to be a good politician, so I began to think about my next steps.
Those next steps would be DecisionPoint, the company I founded, which is the center of the story for this book. While the book has information about what DecisionPoint was, and its evolution, I believe the real value was the lessons learned that I took away from the experience. That’s what I hope to share with other folks that are thinking about starting a company or becoming part of a startup.
Often, the people that get involved with a startup do so thinking that they are prepared for the challenge, but after getting involved, realize that the situation was more than they bargained for. In a startup, the stakes are high and there is quite a bit of personal risk in the form of salary, benefits, etc. Additionally, everyone involved in the startup is faced with a series of many highs and many lows in the quest to make the startup viable. In many cases, the goals of the individuals that founded the startup are never met, or fall short of the dreams these individuals had when founding the startup.
The chances that a startup either goes public or gets acquired is very small. Most startups die somewhere along the process, and that’s just a fact of life. When the startup fails, can you answer the question “what happens when my best was not good enough?”
When I think back about what motivated me, there were a lot of factors. At the time, I was working for Sequent Computer Systems, which was a large computer hardware manufacturing company that was eventually acquired by IBM. I started with Sequent as an information technology resource, employee number five hundred. Because of Sequent’s size, there were many opportunities for individual growth and reward, and I certainly took advantage of those opportunities. My specialty was getting finance and accounting software, known as Oracle Applications, to run fast on the Sequent hardware platform. While my primary function was an internal resource, supporting Sequent’s internal implementation of Oracle Applications, I also spent a lot of my time traveling to customer sites to help them do what we had done at Sequent. Additionally, I spent a lot of time traveling around the world to help sell Sequent hardware for customers that wanted to run Oracle Applications.
Like any other company in the hardware technology market, there was a lot of risk, but also a lot of reward. Between stock options, bonuses, salary increases, and even two employee excellence awards that involved very nice vacations for my wife and I, I had done well for myself. I had a fantastic reputation and a good career. On top of that, I had a great family, which included a wife and two young children. However, even with all of that, I kept having the feeling that there was something missing. From a career perspective, I wanted more. Sequent had grown a lot in my time there, and I had moved on from being an information technology resource to being more focused on helping Sequent’s sales force sell more Sequent hardware. As Sequent grew, like any company, it began to lose the qualities of a company that I enjoyed. There was less freedom, more rules, and more bureaucracy. As many will tell you, I’m not the best bureaucrat, and I’m too honest and blunt to be a good politician, so I began to think about my next steps.
Those next steps would be DecisionPoint, the company I founded, which is the center of the story for this book. While the book has information about what DecisionPoint was, and its evolution, I believe the real value was the lessons learned that I took away from the experience. That’s what I hope to share with other folks that are thinking about starting a company or becoming part of a startup.
Often, the people that get involved with a startup do so thinking that they are prepared for the challenge, but after getting involved, realize that the situation was more than they bargained for. In a startup, the stakes are high and there is quite a bit of personal risk in the form of salary, benefits, etc. Additionally, everyone involved in the startup is faced with a series of many highs and many lows in the quest to make the startup viable. In many cases, the goals of the individuals that founded the startup are never met, or fall short of the dreams these individuals had when founding the startup.
The chances that a startup either goes public or gets acquired is very small. Most startups die somewhere along the process, and that’s just a fact of life. When the startup fails, can you answer the question “what happens when my best was not good enough?”
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