Simulating The Brain: Baynote CEO Jack Jia (Part 2)

SM: The infighting at Interwoven was visible from the outside?

JJ: Completely. After the first time we did not get funding because of infighting, we brought in one of the investors to help resolve the issues, and that investor quickly became part of the infighting. He became the acting CEO, but Peng had a lot of issues with him. We got lucky for our first major rounds, which were done by JKMB and Eileen Richardson, who later was CEO of Napster. She had missed on the opportunity to invest in ClearCase, and in that she saw a resemblance with what we were doing.

We had a prototype and a good product in beta, but no other VCs wanted to invest in us. She came in and did a unique technical due diligence. She sent in some technical consultant, who I hosted. I showed him the product capability. He yanked the power of the workstation that I was doing the demo on. Then he asked me to plug the power back in and get the system back to where it was. He wanted to see if our system could support power failure. I had actually engineered the solution to that one week before. He saw that and said “Good, I am done,” and he left. We got the funding.

Unfortunately, the infighting continued. There was a personality mismatch between the acting CEO and Peng. They could not reconcile, and we quickly ran out of money again. This was in early 1998. Engineering was in good shape, but the business side was chaotic. We would try to get money, and the acting CEO and the founder would get into a fight in front of the VC. We had great customers like FedEx, Ford, GeoCity and other good names who bought our solution.

VCs would not commit until we had a CEO, and CEOs would not commit until we got funding. Finally, Eileen Richardson stepped in as the acting CEO. Soon after we found Foundation Capital and we hired a professional CEO, Martin Brauns.

SM: Did you have visibility in all of this at Interwoven?

JJ: I was on the executive team. I knew everything that was going on. I spent half of my time walking outside of the office to get people to calm down and stay.

SM: It is invaluable experience.

JJ: It is absolutely invaluable. When Martin came on board, the first week the company completely changed. For a year and a half we could not get things fixed. Suddenly things were in order. He changed the marketing and sales VPs. He cleaned things up and changed the culture. He managed and gave unbelievable leadership. We had the exact same product, but suddenly the company started taking off. He came in March 1998, and a year and a half later we had an IPO. A year later we were worth $7 billion. Those were crazy times.

SM: When things got cleaned up and you were on a new trajectory, did the capital get sorted out in a way that you were protected?

JJ: Yes, absolutely. When the company took off we all benefited. There was a lot of dilution, but the board and Peng all pushed to give the employees more options.

This segment is part 2 in the series : Simulating The Brain: Baynote CEO Jack Jia
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