Business Objects Case Study Dave Kellogg Plug and Play Tech Center Collaboration Track (PACT) Event Revision 1.2 10/10/08
Disclaimer <ul><li>Facts / data are from memory and approximate </li></ul><ul><li>Facts presented are to illustrate the le...
Business Objects Basics <ul><li>VC-backed, French startup </li></ul><ul><ul><li>Investors included:  Discovery Ventures, A...
Co-Founders <ul><li>Bernard Liautaud, CEO </li></ul><ul><li>Denis Payre, COO </li></ul><ul><li>Partners </li></ul><ul><ul>...
Frugality / Profitability <ul><li>About half the company was sold for ~$5M </li></ul><ul><li>Why so low a valuation? </li>...
Targeting the US Market <ul><li>Software is not like baseball </li></ul><ul><ul><li>Do not attempt to work your way up thr...
Empowerment / Decentralization <ul><li>The CEO was never afraid to hire those senior to himself in terms of experience </l...
Near-Death Experiences <ul><li>Two software development projects nearly killed the company </li></ul><ul><ul><li>BusinessO...
Product Excellence <ul><li>It is possible to carve niches off major players with focus </li></ul><ul><ul><li>BusinessObjec...
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Business Objects Case Study at Plug and Play Tech Center

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These are the slides from my presentation at the Plug and Play Tech Center\'s Collaboration Track event in 10/08. The event was designed for primarily international entrepreneurs.

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Business Objects Case Study at Plug and Play Tech Center

  1. 1. Business Objects Case Study Dave Kellogg Plug and Play Tech Center Collaboration Track (PACT) Event Revision 1.2 10/10/08
  2. 2. Disclaimer <ul><li>Facts / data are from memory and approximate </li></ul><ul><li>Facts presented are to illustrate the lessons learned </li></ul><ul><li>The lessons learned represent my opinion </li></ul><ul><li>Intended audience </li></ul><ul><ul><li>Group of international entrepreneurs and venture capitalists </li></ul></ul>
  3. 3. Business Objects Basics <ul><li>VC-backed, French startup </li></ul><ul><ul><li>Investors included: Discovery Ventures, Atlas Ventures, Innovacom </li></ul></ul><ul><li>Founded by two 27-year-olds from Oracle France in 1990 </li></ul><ul><ul><li>3 rd -party inventor submitted concept to Oracle France </li></ul></ul><ul><ul><li>Idea was shot down on the corporate ladder </li></ul></ul><ul><ul><li>They decided to found company to commercialize the idea </li></ul></ul><ul><li>Category: business intelligence software </li></ul><ul><ul><li>Query and reporting, later added analysis, dashboarding, planning </li></ul></ul><ul><li>Sold to SAP for $6.8B in October, 2007 </li></ul><ul><li>Me </li></ul><ul><ul><li>Ran marketing in various forms from 1995 to 2004 ($30M to $850M) </li></ul></ul><ul><ul><li>Based in both Paris and San Jose </li></ul></ul><ul><ul><li>Currently CEO of Mark Logic, leading provider of XML servers </li></ul></ul><ul><ul><ul><li>Specialized DBMS for managing XML </li></ul></ul></ul><ul><ul><ul><li>Documents, unstructured, and semi-structured data </li></ul></ul></ul><ul><ul><ul><li>Filling a void between relational databases and search engines </li></ul></ul></ul>
  4. 4. Co-Founders <ul><li>Bernard Liautaud, CEO </li></ul><ul><li>Denis Payre, COO </li></ul><ul><li>Partners </li></ul><ul><ul><li>Shared office, joint photos and interviews, et cetera </li></ul></ul><ul><ul><li>Worked successfully, in a stormy way, for 6 years </li></ul></ul><ul><ul><li>Pro: healthy tension improves ideas </li></ul></ul><ul><ul><li>Con: too much conflict can paralyze </li></ul></ul><ul><li>Lessons learned </li></ul><ul><ul><li>There is usually a greater and a lesser equal </li></ul></ul><ul><ul><ul><li>Think: Simon and Garfunkel </li></ul></ul></ul><ul><ul><li>The more this is understood by both, the better </li></ul></ul><ul><ul><li>CEO job changes much less than COO job as a company grows </li></ul></ul>
  5. 5. Frugality / Profitability <ul><li>About half the company was sold for ~$5M </li></ul><ul><li>Why so low a valuation? </li></ul><ul><ul><li>Inexperienced founders (27 year old founders less hip then than today) </li></ul></ul><ul><ul><li>Paris location (outside the mainstream) </li></ul></ul><ul><ul><li>IP licensed with royalties (some IP risk; later renegotiated) </li></ul></ul><ul><ul><li>Overall perceived low odds of success </li></ul></ul><ul><li>100:1 returns for original VCs </li></ul><ul><ul><li>In cases, the best investment they ever made </li></ul></ul><ul><li>The good news was this drove a culture of frugality from day one </li></ul><ul><ul><li>Build your own desk </li></ul></ul><ul><ul><li>Profitability and cash generation a must item </li></ul></ul><ul><ul><li>In software: profitability is a decision </li></ul></ul>
  6. 6. Targeting the US Market <ul><li>Software is not like baseball </li></ul><ul><ul><li>Do not attempt to work your way up thru the minor leagues </li></ul></ul><ul><ul><li>Do not say “let’s take France first and then expand” </li></ul></ul><ul><ul><li>No one outside France will care that you own France </li></ul></ul><ul><li>Business Objects understood this from inception </li></ul><ul><ul><li>Focused on USA from early on </li></ul></ul><ul><ul><li>Eventually moved headquarters to the USA after repeated troubles </li></ul></ul><ul><li>Lessons learned </li></ul><ul><ul><li>To be a real player, you must be a leader in the leading market </li></ul></ul><ul><ul><li>Consider relocating all / part of your non-US-based company </li></ul></ul><ul><ul><li>I never appreciated Silicon Valley so much as when I moved to Paris </li></ul></ul>
  7. 7. Empowerment / Decentralization <ul><li>The CEO was never afraid to hire those senior to himself in terms of experience </li></ul><ul><ul><li>Most people say they aren’t, but behave otherwise </li></ul></ul><ul><ul><li>Deep experience at board, field, and corporate level </li></ul></ul><ul><li>French headquarters drove decision to use country model </li></ul><ul><ul><li>No “worldwide VP of sales” </li></ul></ul><ul><ul><li>Empowered general managers running P&Ls in countries </li></ul></ul><ul><li>Benefits / lessons learned </li></ul><ul><ul><li>Empowerment: run your own (distribution) business </li></ul></ul><ul><ul><li>Experimentation and benchmarking: comparability </li></ul></ul><ul><ul><li>Frugality / profitability: N people have P&Ls, not 1 </li></ul></ul>
  8. 8. Near-Death Experiences <ul><li>Two software development projects nearly killed the company </li></ul><ul><ul><li>BusinessObjects 4.0 (1996) </li></ul></ul><ul><ul><li>Tosca / Cadenza (1999 – 2002) </li></ul></ul><ul><li>One was launched into the market (Business Objects 4.0) </li></ul><ul><ul><li>“ I thought my motherboard was broken” – anonymous customer </li></ul></ul><ul><ul><li>Result: grow deceleration, stock price drop 90% </li></ul></ul><ul><li>One never made it out (Tosca / Cadenza) </li></ul><ul><ul><li>Result: forced hand to buy Crystal Decisions for $1B </li></ul></ul><ul><ul><li>Overall the acquisition was a very good thing </li></ul></ul><ul><ul><li>Benefits beyond product line completion (e.g., market share leadership) </li></ul></ul><ul><li>Lessons </li></ul><ul><ul><li>Success leads to arrogance and arrogance to failure: watch the degree of ambition in your development plans </li></ul></ul><ul><ul><li>Where you develop matters: system vs. application software </li></ul></ul><ul><ul><li>Use agile methods and avoid waterfall nightmares </li></ul></ul><ul><ul><li>Choose code names carefully (Tosca is a tragedy) :-) </li></ul></ul>
  9. 9. Product Excellence <ul><li>It is possible to carve niches off major players with focus </li></ul><ul><ul><li>BusinessObjects, WebIntelligence, Crystal Reports </li></ul></ul><ul><ul><li>Best-of-breed in category </li></ul></ul><ul><li>Oracle had every advantage </li></ul><ul><ul><li>Discoverer and other BI products </li></ul></ul><ul><li>Oracle’s products were not best-in-class </li></ul><ul><ul><li>Nor did they interoperate well outside the Oracle world </li></ul></ul><ul><li>Lessons </li></ul><ul><ul><li>Focus enables competitive advantage </li></ul></ul><ul><ul><li>Customer intimacy / product excellence matters: not everything is a commodity </li></ul></ul><ul><ul><li>Structural advantage: use not-being-Oracle as an advantage against Oracle </li></ul></ul>

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