Pioneering Real-time Computing: TIBCO CEO Vivek Ranadivé (Part 3)

SM: You mentioned that you developed a value system during your time at Fortune. What was that?

VR: Fortune Systems was an interesting company. I saw that it would be mathematically very difficult for them to make it. If you looked at the total market, the PC market, and how much money they were spending on their full-blown factory, sales force, distribution channel, and R&D, then you realized the figures did not work. They were spending $400 million to $500 million.

In order to make a 50% margin they would have had to be a $700 million company just to break even. When you look at the size of the TAM, it would have required a 30% market share just to break even. There were a bunch of other companies, including IBM and HP, that already had market share.

The value system was one where I wanted to create a very different type of business. It was one where I would be profitable right from the start. It was one where I was being responsible to shareholders every step of the way. I did not want a “build it and they will come” model.

SM: Your model was to engineer a business to succeed from the beginning.

VR: Exactly. To get customers involved right from the start. Fortune was a spectacular company but was also a spectacular failure. They had raised a ton of money. It was hailed as the biggest thing since sliced bread and went down in flames.

SM: When you left Fortune were you prepared to go out on your own?

VR: I was, but that was in 1984 and the PC bubble had just burst. Venture capitalist were running for the hills. Today if a young guy walks into a VC office everyone says, “Great”, but in the mid ’80s if a young guy walked in they would say, “You don’t have experience, go get some first”. That was the mindset then.

Nobody would talk to me. That further reinforced my mindset that I needed customers to start funding me. There was a gentleman who would fund guys like me to go sell the product. If we succeeded then we had to give the money back and he took a big ownership of the company. If it failed then we could walk away. That was the only deal I had. It was one that kept with my own value system.

I managed to talk myself into the office of a guy named Bob Rubin. When I was at Harvard I graduated at the top of my class. I was recruited by the Goldman Sachs of the world and I knew people. I gave him my idea of a software bus. He had just been made head of Goldman Sachs, and the one area that scared him to death was the trading floor because it was a total mess. He gave me a contract to see if I could apply my idea of a software bus to the trading floor. This is the same man who became Treasury secretary under Bill Clinton.

I went and looked at the trading floor. There were these guys in red suspenders who had stacks of video monitors on their desk. It was the same technology you would see at airports arrival and departure screens. There were video pages they were putting in. This turned out to be a fantastic environment for my thesis.

SM: You found the perfect applied solution.

VR: Wall Street of the ’80s was like the web before the web. It was a microcosm of the future. They had early adopters and a lot of experimental ideas. One morning they asked me to show up and tell them what I was going to do. I was twentysomething years old, and they had a meeting before the market opened and I was the punk taking the elevator to the top of the building. They had a plush dining room where the partners had breakfast every morning. I walked in and saw the five guys who were running Goldman Sachs. These were the legends of Wall Street and I was supposed to talk to them about how I was going to change the trading floor. That is how I started life as an entrepreneur.

This segment is part 3 in the series : Pioneering Real-time Computing: TIBCO CEO Vivek Ranadivé
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