Steve PapaSerial / Parallel Tech Entrepreneur
The Endeca Story
Sept. 2006
Oct. 2011
Rule #1: Ignore Experts “This will never scale”
– Computer architect ’99
“This is a science project” – Anonymous venture capitalist ’99
“It took me 3 days to build what they sold to Fidelity” – Ilya Gorelik, PTC
“Navigation is our core competency” – BN.com, 11/00
“This is just a GUI” – World’s #1 database expert, 2001
“I know a couple of Russian programmers that could build this in 3 weeks” – Harvard students, 10/01
“We already do this” – Amazon, 3/02
Perseverance Required “Is it right to take venture money
when the technology may never work?” – Endeca team member, Jan 2000
“What difference does a week make in closing our funding?” – Tuesday, Sept 4, 2001
“Who wants to be customer #2 of a venture backed software company in October 2001?”
“They are going to go out of business in 6 months” – Verity CEO, 3/02
“You can’t have folks sharing rooms at Demo 2001!” – PR Agency (we saved $3,000)
“You don’t have the balance sheet to rent this space.” – Real Estate agent, Fall 1999
Endure Self-Inflicted Doubt“We don’t even know if this product is any good”
Endeca board member, last “real” board meeting, July 2011
<3 weeks before $800M offer, ~6x revenue
May 1999
Phase 1: 5/99-11/00Getting to First Customer
“Basic research project” to bring efficiency to markets like eBay Got lucky bringing the right scientists together
Funding was during the Internet bubble (Spring of 2000) and easy Assembled great set of highly credible VCs and individuals
First customer was 6 week sales cycle…6 months to deploy
Wind in our sails….
HBS graduation
Endeca fo unded
Phase 2: 2001Getting to Second Customer
First year over year decline in IT industry spending EVER “I spent $8M trying to solve
that problem last year and I am out of money”
Ecommerce declared dead
Willing to solve any problem a customer threw at us Technology “platform” vision,
interest but no commitment
Built a leadership team with deep experience
Closed second round of financing the week after 9/11 Within 6 weeks of cashHow unlucky and lucky can you get?
Catching a “Falling Knife”Series A
Series B
Angel
Phase 3: From 5 to 100 customers
First 5 included the use of our “platform” technology for: Ecommerce Enterprise search Business intelligence
Ecommerce emerges as the painkiller….increases revenue ~ 30%
Despite great results still a recession, still need early adopters
“I already do this”
Phase 4: From 100 to 600 customers….
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
Fiscal Year
Revenue 47 478 2,473 5,787 14,859 34,962 67,000
% Growth n/ a 917% 417% 134% 156% 135% 100%
2000 2001 2002 2003 2004 2005 2006 est
Ecommerce + big ($) problems nobody else could solve
November 3rd 2006
Phase 5: Recession, Reinvention and Re-Organization
No customers have budget to solve “big problems” Detected as early as
October 2007 (unlucky) Raise $25M of funding in
Q4 2007 in 5 weeks (lucky)
2008 dislocation worst since the Great Depression
Forces us to recognize our platform focus missed the bigger opportunity as two distinct products
Two Endeca business units emerge in 2010: Agile Ecommerce = Endeca
InFront Agile Business Intelligence =
Endeca Latitude
Governor Patrick, July 2011
Phase 6: Exit – IPO or M&A?August 2011….
AAA US Treasuries?Europe?
Time
Running a public company
Hiring bankers
The Platform lives on!
Main lesson: Ideas, Figuring it out, and Execution
Ideas versus execution: Ideas are not in short supply
“Figuring it out” is the fulcrum Survivorship bias (crossing the
chasm, customers right?) Experience must be placed in
context Timing, territory, and talent
Cap table is a scarce resource – you need help
Relentless pursuit of credibility / Eliminate risk
General Principles taught, learned, and earned
Pursue markets you are passionate about
Macroeconomics, market cycles and investor sentiment matter
Always a good time to innovate but not always a good time for every innovation
An exit plan is more than a list of companies and IPO
More people you hire will be selfishly focused than not
“Coin operated sales” is not disparaging
Focus and running a 3 legged race where others aren’t
Get experienced help # people that can truly
help / # of people claiming they can 0 If its too good to be
true….it likely is
Repeaters versus creators
Doers vs. leaders
Intellectually curious vs. focused
Experience versus potential
Credibility versus talent…or both?
Luck Favors the PreparedLuck plays a bigger role than most will admitBut…
Work hard, do things you love to do, have fun and with some luck….you’ll become an “overnight success”