Sept. 2006

Oct 2011

May 1999

Wind in the sails…..HBS graduationEndeca

founded

Phase 1: 5/99-11/00 – Getting 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

Catching a falling knife….

Series A

Series B

Angel

Phase 2: 2001 – Getting 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

Who wants to be customer #2 of a venture backed company, customer #1 signed July 2000, cash runs out in Oct?

Willing to solve any problem a customer threw at us– Technology “platform” vision, interest but no comitment

Built a leadership team with deep experience

Events and a decision…..

Speaking to every firm out there

As of Aug 1, cash until mid-Oct

As of Aug 15, finally a term sheet from a bottom feeder

As of Aug 21, insider term sheet to close Sept 7 ….much better

As of Sep 1, outsider term sheet to close Sept 14…..even better

How to decide?

Lessons

Macroeconomics matter more than almost anything else

Fundraising starts long before you are pitching to investors

Get ANY term sheet and never stop looking for options until a round is done

It is a multi-play game…relationships matter for the long term Choose who you go into business with carefully – ethics,

commitment, someone that is there for you when you need them

Luck is not optional

Once you agree on a deal….get it done before the world changes

Phase 3: From first 5 customers 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 plays a bigger role than most will admit

But…Luck favors the prepared

Work hard, do things you love to do, have fun and with some luck….you’ll become an “overnight success”

Enterprise Software 2012

2000-present….consolidation era– Big enterprise sw reps….going away

Hard to sell big ticket to IT without account ownership– Partners hard to come by

low cost, low visibility account entry

SAAS apps– Under the radar account entry– Selling to the business

Big Data

Real but overhyped

Apps play versus infrastructure play– Infrastructure too complex for all but a few organizations– Moore’s law + open source + too much competition makes the

infrastructure play a challenge– Only a few very large like Facebook - Teradata as an example

Fundamentally new opportunities in apps

What can a venture partner bring?

Credibility

Talent

Support while figuring it out

Support while friends are destroying the economy

Coaching

Parties with peers

Human Capital Sources and Implications

Academic Smart intellectually curious overachiever Experienced Skilled Combinations of the above

What makes a company builder?

What makes an entrepreneur?– Don’t make it too easy….lesson learned, won’t be appreciated