Personalized Alerts In The Enterprise: xMatters CEO Troy McAlpin (Part 3)

SM: Where did you go from there?

TM: By then I was twenty-seven, and I thought I was ready to be a CEO. It boggles my mind how crazy I was. The reality is that I was ready in some ways, and I was still very naïve in other ways. When I look at some of the decisions I made I shake my head.

SM: You have to try it to really learn. What kind of company did you start?

TM: I took over a fifteen-year-old software company in the computer-aided design and manufacturing space. It was small.

SM: Did you have any background in that?

TM: No. I believe that 95% of business is the same no matter where you go. You need to relate to customers and beat your competitors. If you are aligned to what your clients need you will make it.

SM: I have done a lot of different projects across multiple segments as well. The more you go to the chip infrastructure side, the less comfortable most people are because of the highly technical nature of the work.

TM: I remember the first time the founder of the company was talking about a gate array. I thought he was saying Gatorade.

SM: How did you find this company?

TM: I found them through my professional contacts. I was looking for a company that had good people because I was feeling down from my last experience. I needed to go somewhere and run an operation. A contact of mine told me about a great company that had a good product and had salt of the earth people working at it. He said the problem was that they could not get out of their own way. It was led by an engineer who did not want to be the CEO and was only doing it because he had to. He had been running the company for fifteen years, and the company remained small.

They had two hardware lines and a software line, but it was a very small company. They were trying to do three things. First, they were reselling a Japanese product. Second, they were manufacturing a hardware product. Finally, they had their software product. The product they were building was the entrepreneur’s baby. He could not see that it needed to go away. They were in receivership, and I came in as the CEO. I was getting paid $1 a month and for the first few months I was clearly overpaid. The incentive was stock in the company. At times I was running the company with $5,000 in the bank and a $75,000 payroll. It sounds ridiculous, but it was fun learning how to run a company without a lot of capital.

SM: What was your strategy?

TM: First I had to get everyone believing that we had a chance even though we did not have a lot of capital. I then hit the road for six weeks straight to meet customers to learn about their business, their perception of us and their perception of our competitors. After ninety days we had squeezed as much as we could out of the business. I sold off the dealership of the Japanese products and discontinued the hardware product. That was a hard decision because it was clearly the entrepreneur’s baby. Our competitors in that space were very large and very well funded.

SM: So you kept the software product. What did it do?

TM: The software printed circuit board design and manufacturing at the chip level as well as at the board level. We would take the output of a Cadence or Mentor and made the design manufacturable.

The two founders of the business really wanted to retire. We worked hard for the next eighteen months and really turned the software portion of the company around. We grew it from $2 million to $15 million and then sold out to a publicly traded company in 2000.

SM: That sounds like a great learning experience for you.

TM: It was scary and a great experience.

This segment is part 3 in the series : Personalized Alerts In The Enterprise: xMatters CEO Troy McAlpin
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