Child Entrepreneur David Koretz, Now CEO Of Mykonos Software (Part 5)

Sramana Mitra: By this point of your career you had founded three successful companies. What are some of your tips on customer acquisition and how to build businesses? 

David Koretz: There is an interesting challenge of risk. For a long time BlueTie was way out ahead of Google and Microsoft. When they began doing Web-based applications we still had a big lead over them. We had nine-figure M&A offers on the table that, in retrospect, we should have taken. We got caught up in an easy trap of believing that ramp rates will never stop.

We turned down the offer right around the time that Zimbra did their deal. As those assets came up there were fewer companies that could be the drop-off point, and when they left other companies got even more desperate. We should have realized that we had a unique time and opportunity, and we didn’t.

Sramana Mitra: Who among the large guys in business in 2007 should have bought your company? 

David Koretz: Cisco would have been a logical buyer because what powers Web conferencing today is the calendar. They needed to own the calendar.

Sramana Mitra: The primary business of WebEx was sales lead generation. 

David Koretz: Clearly webinars were a big part of it. The salespeople who use it for presentation, that was their primary purpose.

Sramana Mitra: I don’t see that being the part of a workflow where the email system finds its home. 

David Koretz: It’s where a calendar finds its home. If you are a sales rep and you make a calendar appointment, it should automatically establish the WebEx meeting for you.

Sramana Mitra: I don’t buy it. 

David Koretz: You have history on your side because it clearly didn’t work.

Sramana Mitra: Companies like Microsoft are in this business. 

David Koretz: There were definitely big companies in the business, and long term there was undoubtedly going to be vendor consolidation. People are going to want a tighter, more integrated stack. They want a system where everything is integrated, including Web conferencing. I don’t think anybody has executed on it particularly well.

Sramana Mitra: Google is going after this space as well now. I have a company in 1M/1M that is going after a related space. There is a big exodus from Lotus Notes to Microsoft or Google. The Microsoft part is not a surprise, the Google part is. 

David Koretz: I am not sure Google has it right yet. They have taken the headlines and have created the fear.

Sramana Mitra: They are doing very well in the space. Serious enterprises are moving to Google for this application space. That surprises me. 

David Koretz: We watch the deals they are doing on the backend because we compete with them there. Here is why I don’t think they have it right yet. A huge percentage of their deals are still free. They have a very low up-sell percentage. They are doing deals at massive, massive discounts off retail. Right now they are trying to capture market share.

Sramana Mitra: The company that needs to be in this space, and would like to be there, is Salesforce.com.  

David Koretz: On paper today Salesforce.com is a Google partner.

Sramana Mitra: True, but they need to be in this space.  

David Koretz: I know the guys there pretty well. I don’t believe they are convinced that they need an alternative to Google. They believe Google gives them the right competitive advantage. I also think five years from now they will recognize that as a big error.

This segment is part 5 in the series : Child Entrepreneur David Koretz, Now CEO Of Mykonos Software
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