Terry Cunningham’s Adventures: Crystal and Coral8 (Part 7)

SM: Which markets are you selling to?

TC: We sell into ticks, clicks, and blips. Ticks are Wall Street, clicks are e-commerce, and blips are sensor networks like RFID. Ticks are a no-brainer and we have a lot of big customers. Clicks are customer interaction management and next generation CRMs. We have a lot of travel customers doing scenarios where a user is browsing itineraries and a profile-driven offer will pop up in front of their face. Business users have travel habits like 4-star hotels near airports. We give travel companies real-time behavior tracking.

SM: I would think logistics would be one of your best verticals.

TC: It requires a significant change in the way they run their business. They actually have to believe in interrupt-driven systems. That takes time. We have been working on an OEM deal with SAP for two and a half years. One guy said, “You have to understand, for this all to work we have to event-enable the entire stack. It will take a decade.”

SM: That is true. It is not an easy thing to bring to market.

TC: That is why for us the bowling pins are the ticks, clicks, and blips.

SM: How big are you now?

TC: We are at 50 people. We have double digits in revenue, so it is starting to work.

SM: Did you fund it all yourself?

TC: It was my buddy Steve and me. There are some friends who have invested. I have talked to a lot of VCs, but they scare the daylights out of me. A friend of mine has only done VC deals, and his description of having a VC partner is a rock-fetching exercise. Every meeting is the same. The smart VC says, “Have you thought about your margins in Europe now and what could you do to move that margin up? You should look into x.”

As a CEO you now have to. The next meeting he reports back on all of the requests, and the results are that it won’t affect gross margin in Europe, positively or negatively. The VC says “Hmm. OK. Hey, have you thought about this?” and they go on to another rock-fetching topic. On the flip side, they may have cool ideas that you have not thought about.

SM: The place where good VCs make a huge difference is shown when you look at the deals with Yahoo! and Google. There is no reason to take venture money unless you absolutely have to.

TC: I have a lot of people I can call and get ideas from.

SM: In a way, if you are working with VCs early on in your career, you learn a lot from them. As you mature and gain business experience, you find out they don’t know as much as you do because you have been in different trenches.

TC: Yes, I have spoken with some and their reps were kids. I ask them if they have ever been in a software company and they haven’t, but they have read a great textbook or two!

SM: Should I have asked you anything else that I didn’t?

TC: There is a whole lot about the continuous intelligence idea that I could talk about, but I think you get the point. It will be, in five years, a core infrastructure like the database. We are the platform vendor but we need other people to build the apps.

More than anything, you will notice event-driven concepts start to pop up in these use cases. Companies are going to start doing things that you have never seen before because they now have the technology to do so. They are becoming better businesses.

SM: Because of the way you are structured you can do it right, patiently. If you have institutional investors involved they work in 7-10 year fund cycles.

TC: If you even get that long of a cycle. I typically laugh at IRR because there are only two variables, time and amount. If the amounts are down the only other lever is time. Shorten the cycle and sell earlier. That does not make sense all the time.

When I look back at Crystal, I had no vision for what I was doing, I was just trying to build a cool company. Now there is a grander plan. I know more.

SM: It is easier to change the world when you know what it looks like. Great story, thanks for sharing it.

This segment is part 7 in the series : Terry Cunningham’s Adventures: Crystal and Coral8
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