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The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
The story of veritas 0804
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The story of veritas 0804

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  • copyright Mark Leslie
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    • 1. Copyright M. Leslie 1 The Story of Veritas And Some Things I Learned… mleslie@leslieventures.com
    • 2. Copyright M. Leslie 2 A Brief History of Veritas  1982 $0  Startup as Tolerant Systems  1989 $0  “Restarted” from Tolerant Systems (12 employees)  Established industry standard file and disk management software  Novel OEM business model  1990 $95K  Renamed Veritas, ML as CEO
    • 3. Copyright M. Leslie 3 Parachuting in as New CEO – 2/90  The Standard VC transition plan  4:00 PM: VCs fire current CEO  4:30 PM: VC’s meet w/ management team  5:00 PM: VC’s + ML meet with management team  5:05 PM: VC’s leave  5:10 PM: ML meets with management team, announces we are changing our name
    • 4. Copyright M. Leslie 4 The new name…  Anything but “Tolerant”  Company-wide contest  My wife proposed… … “Intolerant Software”  Being more marketing aware, I proposed… … “Belligerent Software”  We gave the attorneys three to check out …VERITAS was the “cheapest to defend”  VERITAS means TRUTH in Latin, and also decorates the Harvard University crest
    • 5. Copyright M. Leslie 5 A Brief History of Veritas  1993 $10 M  Initial Public Offering  $16 million raised, market cap of $64 million post-money  1996 $36 M  1997 $121 M  Acquired Open Vision -- Entered Backup / Recovery business  1998 $210 M  1999 $700 M  Acquired Seagate Software -- Established leading position in Windows NT market
    • 6. Copyright M. Leslie 6 A Brief History of Veritas  2000 $1.2 B  F1000 company (5,500 employees)  2001 $1.5 B  New CEO
    • 7. Copyright M. Leslie 7 $95K  $1.5 Billion 12 employees  5,500 Startup  Fortune 1000 --In 10 years
    • 8. Copyright M. Leslie 8 What do investors hate the most?  Re-starts  “The last idea crashed and burned, so let’s sift through the smoking debris and see what we can salvage”  Mergers of equal size companies  “A collision of two garbage trucks”
    • 9. Copyright M. Leslie 9 Tolerant Systems  Start up in 1982  Fault tolerant computing  Too many companies  Tolerant System fails in late 1988  200 people  12  Changed company name to “Tolerant Software”
    • 10. Copyright M. Leslie 10 Tolerant Software and the AT&T Deal  An opportunity to “rent space” in the AT&T UNIX monopoly  Develop next generation file and disk technology  AT&T agrees not to develop these strategic products  Both companies market/sell, share revenue 50/50  Underwrite customer risk of Veritas as start-up - if failure:  AT&T would get source code  AT&T pick up support of customers  UNIX taking off as THE commercial workhorse
    • 11. Copyright M. Leslie 11 A New Business Model  Develop UNIX OS component technology  OEM distribution through systems companies (Sun, HP, etc)  Long term relationships (design-out could take 2+ years) = Very nervous customers
    • 12. Copyright M. Leslie 12 The First Vision  Become an OEM supplier of OS components to UNIX systems companies  Make UNIX more available and robust – suitable for commercial data center usage  Ride the UNIX wave into the ’90s, establish a strong strategic position  High IP content, high margin, but… …Limited scale
    • 13. Copyright M. Leslie 13 1990 Strategy ~4 yrs  Establish new identity  Tolerant Software  Veritas  Develop FS/VM products  Close AT&T deal  Become de-facto industry standard through broadest distribution  Demonstrate profitability  IPO
    • 14. Copyright M. Leslie 14 Setting the Culture  IP intensive company, knowledge-worker based employee population  Highly open communications  We changed the question from “what should we tell them?” to “Is there any good reason not to tell them?”  Weekly meetings, accessible executives  Employee participation in key decisions  1991 3:1 reverse split  1996 merger with OpenVision  Articulated values generated from the “grass roots”
    • 15. Copyright M. Leslie 15 The First Four Years 1990 - 93  Closed, AND renegotiated AT&T agreement  Completed 1.0 releases of products in 1991  Licensed our products to over 60 UNIX system companies including all industry leaders – Sun, HP, Digital and IBM  Set up “annuity” revenue stream  Became profitable in 1992, IPO in 1993
    • 16. Copyright M. Leslie 16 The IPO  Had our initial public offering on December 9, 1993  A “micro” IPO: $16 million raised, $64 million market cap after the money  My message to the employees:  Like a college graduation – marks the achievement, but…  Commencement – the beginning of the next, new phase  Future value will be far greater than current value  i.e., Microsoft, Cisco, etc.  Keep focus on execution
    • 17. Copyright M. Leslie 17 The Next Vision -- 1994  Expand the scalability of the company  Create reseller / end user products and presence  Leverage the strong industry standard position through acquisition  Initiate a Veritas Brand
    • 18. Copyright M. Leslie 18 1994 Strategy (~5 years)  > $100 million revenue run rate  Develop additional OS technologies  Product segmentation of existing products  Develop integrated higher level products  Editions (Oracle Edition, MS Exchange Edition)  Build direct and reseller channel capability  Acquire backup technology  Use VERITAS OS technology for enduring competitive advantage  Platform build-out: Develop equally strong position in… (…Netware, …OS2, …NT).
    • 19. Copyright M. Leslie 19 The OpenVision Merger – 4/97  Both companies ~ $36 m / year, prior year  Veritas 180 people, OV 240 people  Entered Backup business  ~$20 million / yr  Shed other lines of business  Huge distribution channel win  OEM  Global 2000 end user direct  reseller/distributor  Established first “End-to-End storage management” company – changed the paradigm  Used “franchised” OS components to leverage competitive Backup/HSM apps  Difficult integration w/ very different cultures  18% EPS, accretive on Veritas 1997 operating plan  THIS WAS THE COMPANY MAKER
    • 20. Copyright M. Leslie 20 The Seagate Software (NSMG) Merger 5/99  Largest independent NT “enterprise” channel  Each company ~ $200 million  Each company ~ 1000 employees  Veritas gained dominant backup and dominant NT channel position  Critical mass in the industry – clear leader  Pioneered “virtual pooling” pro-forma for “purchase transaction” style merger  Seagate II – financial engineering transaction in 2000
    • 21. Copyright M. Leslie 21 Six Years Later…  FY 2000 reached $1.2 billion in revenues  Which IS > $100 million!!!  F1000 Company  Segmented products to light and full  Successfully re-wrote ALL major agreements  Created very successful “editions” business, with focus on Oracle market, expanding to NT  Developed world class end user / reseller sales force  Acquired FirstWatch product, high availability failover  Ended up with >75% of Sun HA installed base  Entered and came to dominate backup market  1996 = $20 million (#6+)  2000 = ~ $660 million (33 X in 4 years), clear market leader with 40% share.  Went from 1/3 Legato to 3 X Legato  Gained massive channel in NT space
    • 22. Copyright M. Leslie 22 And Some Things I Learned…
    • 23. Copyright M. Leslie 23 Software Is a Great Business  Making money in high-tech is all about getting paid for your IP  The better (and more unique) the IP, the more valuable  In the hardware business the IP is embodied and delivered in the form of a “machine”  The business of making and shipping machines is error prone, which can sap the profit from the business  In the software business you just deliver the IP – sometimes in the form of bits transmitted over the ether…  At the extreme, Veritas delivered a $1.50 CD in exchange for $20 million
    • 24. Copyright M. Leslie 24 The More Grandiose the Plan, the Less Likely to Succeed  Tolerant Systems, OpenVision, Go Computing, General Magic, WebVan were “grand plans”… … and so many others  But many of the great companies started out with small goals, and became overnight successes… …after many years  Like HP, Dell, Apple, Oracle, Microsoft, eBay, Yahoo (and of course, Veritas…) … and so few others
    • 25. Mergers are Risky  Over 10 years we probably did 25 mergers / acquisitions  Three worked  FirstWatch  OpenVision  Seagate  The rest quietly disappeared  But this is OK – the few big winners pay many times over for the rest (not unlike the VC business) Copyright M. Leslie 25
    • 26. Merger Integration is Really Hard!!!  Our most success came when the merger integration was… …LIFE OR DEATH! Copyright M. Leslie 26
    • 27. The OpenVision Merger  The OpenVision Merger was the most difficult  It involved the creation of a new exec team w/ 4 from OV, 3 from Veritas  It took a full year.  When it was over it was the most difficult thing I had ever done in business  Physically / Mentally / Spiritually Exhausted  It started with a key person meeting of Veritas folks, three weeks before signing  Key event was lunch with the EVP Sales immediately after the close  It ended at an offsite – one year later Copyright M. Leslie 27
    • 28. Each Merger is Different  OpenVision – creation of a new company, new team, new values, BEST of BOTH  Seagate – Total Takeove -- We fired ~ 22 of 25 senior execs  FirstWatch – Product team integrated into engineering, product sold through existing distribution (Cisco model) Copyright M. Leslie 28
    • 29. See the Discontinuity - Bet the Farm!  Veritas from the beginning was a bet on UNIX becoming a dominant factor  We figured we would find a way to leverage it in the future  Discontinuity:  Transition from Glass House IBM Mainframe to Unix  Transition from “DP Manager” to “CIO”  Transition from data processing to information technology / internet  Of course, you have to see it before everyone else does! Copyright M. Leslie 29
    • 30. It’s all About Great Strategy! No, It’s Only About Execution!  Strategy with no execution can end in disaster (early OV)  Execution without strategy is getting all the trains to run on time… …but with no place to go  Great companies need both! Copyright M. Leslie 30
    • 31. Copyright M. Leslie 31 Only Those Who Are Both Paranoid and Courageous Will Survive  You never know where and how the world might change  Great companies make transformational changes  You may have to put your whole company at risk in order to save it  Microsoft, Oracle, Intel, HP, Cisco, Apple  You need the courage to stay the course in spite of great risk, great effort, and the many who tell you otherwise
    • 32. Copyright M. Leslie 32 There is Life after Death  In the course of events there WILL BE black days …days so black that all you will see is despair  Dark days are “leadership opportunities”  When things are great, remind people that there will be dark days again
    • 33. Copyright M. Leslie 33 There is No Finish Line…  Building a great company is like building a cathedral  those who start it hopefully will not see its completion  Each accomplishment is a prelude to the next challenge  The IPO is not a “harvest”, simply one step on the long road
    • 34. Copyright M. Leslie 34 Values and Culture make it worthwhile  We spend more time “at work” than any other single activity in our life  The outcome of our efforts is not always predictable so the quality of the daily experience is important  Values and culture define the character of the company  Values and culture permit us to do our work with integrity, and to conduct business in a civilized and honest environment  Values and culture help the organization to recruit the best, the brightest, and the principled  Values and culture do NOT sap the competitive capability
    • 35. Copyright M. Leslie 35 One Final Thought…
    • 36. Copyright M. Leslie 36 If you want a friend… …Buy a dog ROXIE
    • 37. Copyright M. Leslie 37 The Story of Veritas And Some Things I Learned… mleslie@leslieventures.com

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