Pioneering Real-time Computing: TIBCO CEO Vivek Ranadivé (Part 5)

SM: What happened after you sold to Reuters?

VR: For a couple of years I ran the company as a separate company that was part of Reuters. They cut another deal with me based on our profitability, so in the end they paid double the initial purchase price due to performance. It was a great deal for all of my people. Those who stayed did really well.

I promised them that if they hit a certain target I would take the whole company to Hawaii. That was really cool because there were people who had literally never been on a plane before, such as the janitors. I took everyone. It was great.

My dream had always been to make the software bus be the nervous system for every company, not just for financial institutions. I tried to figure out a way to license back the technology from Reuters because they were focused on trading floors.

SM: What year was it by then?

VR: That was around 1996. I set up a new company called TIBCO and licensed back the underlying bus. I let Reuters keep all the financial applications we had built on top of it, along with the trading workstation. Cisco put $20 million into the buyback, which helped me set up TIBCO.

The mission of TIBCO was to be the nervous system for every corporation. It would make every corporation real time. This was in 1997, and in the past 11 years the company has gone from $0 to $700 million in revenues.

SM: When you started TIBCO, the ecosystem around you was much more mature than it was for the previous company.

VR: A lot of things had changed. We had become a gold standard in the banking industry. When I set up TIBCO I was a known quantity. The tables had turned. In exchange for the technology I gave Reuters a big ownership stake in the company. I got Cisco, which embeds my company, to put $20 million into it.

SM: So you went in with a stronger footing.

VR: Things were different, and I started to think that in this case it might not be bad to have a venture capitalist because Reuters’ agenda would be their own, Cisco’s agenda would be to sell routers, so I needed someone whose agenda would simply be to make the company more valuable. I went to John Dorr at Kleiner, Don Valentine at Sequoia, and Gabe Meyer, who was at Mayfield. Sequoia really wanted to do it because Don was the chairman of Cisco.

My approach was that the company from day one was valued at $200 million. There was no due diligence and I would allow them to put $10 million in. I gave them the opportunity to do it or not. All three of them said yes. The guy who was my neighbor, Gabe Meyer, got along well with the English guys who were my big shareholders. I had a dinner to get all the investors together and hopefully get them on the same page. However, Cisco had a reputation for being cheap, and it preceded them. The dinner started and Don Valentine looked at the Reuters guy and said “Tell me what you do,” and of course being a 150-year-old company with a monopoly in financial news and information, it was interpreted by the Englishman as a Yank asking him “Boy, what do you do?”

Right away they did not hit it off. The English guy pulled out a cigarette and Don said, “You can’t smoke in front of me,” then he ordered the most expensive bottle of wine on the menu. David, the English guy, said, “If I am paying for dinner you are not ordering that bottle of wine,” and it went downhill from there.

I had the painful job of telling Don that I was going to have to go with Mayfield for the investment. He was very, very mad. I had the highest regard for Sequoia. I don’t want to disrespect them in any way.

This segment is part 5 in the series : Pioneering Real-time Computing: TIBCO CEO Vivek Ranadivé
1 2 3 4 5 6 7