From Croatia to Silicon Valley, Cleaning Up The Environment: Neno Duplan, CEO of Locus Tech (Part 7)

Sramana Mitra: Given the landscape you have described and the fact that many of the startups are already thinning out, I believe that you will be getting acquisition offers from the ERP crowd as they look to move into this space.

Neno Duplan: You are right, and we already have started to get those offers. This is not the time to sell the company. The stars have aligned incredibly well for us. In 2000 when all the startups came online, we saw a downturn come and wipe them out. Now we have a mirror image of that happening all over again. We have time on our side.

Sramana Mitra: Would you raise money to scale faster and compete with the major ERP vendors? With the business you have today, you could get a $100 million valuation to raise money.

Neno Duplan: We have flirted with that idea several times. In 2000 we had an offer, and the deal did not go through because the bubble burst. Thank goodness for that. In 2007 we went knocking on Sand Hill Road and had meetings with a bunch of VCs, but they just didn’t get what we were talking about. They could not understand why companies would buy software to help them manage dirty water. They did not feel there was a market for it. Now that environmental issues are front-page news; there are entire funds set up to find companies like ours. We have a steady stream of revenue from Fortune 500 companies.

I realize the benefit of taking on investment in the company to scale it faster. In order to do that, the market must be aligned. A year and a half ago that would have been a smart thing to do. However, the recession hit. What now? I am not sure that I could bet correctly on the next market driver. It is better to wait and know where the market is going.

Sramana Mitra: Entrepreneurship is about customers, revenue, and profits. When you reach a point where you can turn down venture money, you have found the holy grail of entrepreneurship.

Neno Duplan: I am amazed that in this day the market gives more praise to the companies that raise money than the companies that created the marketplace and have legitimate products.

Sramana Mitra: That is because the media is full of people who think that raising money is success. It is not success, and it can amount to failure because you give your company away. I was here in the middle of the dot-com revolution. When you went to a party, everyone was talking about who was going to raise more money. I now take the position that I do not want to raise money until I am at a place where I call all the shots.

Neno Duplan: It is amazing how much publicity you can get just by raising money. The media puts companies who do not take venture capital on a list of second-tier companies, and that is frustrating.

Sramana Mitra: That is why I think this is a great company and why your story is so interesting.

Neno Duplan: By now I could have sold the company for enough money to live comfortably for the rest of my life. It is not all about money. It is about being satisfied with what you do, and I believe that at the end of the day what we do matters. The environment cannot continue to bear our current way of doing business, and we help companies realize that. The first time we meet with a client they are always worried about someone hacking our site and finding the information that we store for them and publicly disclosing that information in a way which is meant to embarrass them. Our answer is to be transparent because that is the best disinfectant you can have.

The moment you open up your data, nobody is going to look at it because there are so many other things to do on the Internet. Some of the companies have done that and they could not believe how much value they have received because of it. They know exactly where they stand and what they have to deal with. They don’t have to pay a consultant $300 an hour to get an answer to a simple question because they can find it through a search on our service.

Sramana Mitra: I want to shift directions on my last question. What is happening in Croatia? Do you keep in touch with what is going on there?

Neno Duplan: I don’t do anything there with business, but I return every summer to spend time with family. Eastern Europe is booming, but it is for primary issues. Environmental issues are secondary. I left there in my early twenties, and I really don’t have any business relationships there.

Sramana Mitra: That you for sharing your story. It is a very good one, and I certainly appreciate what you have done.

This segment is part 7 in the series : From Croatia to Silicon Valley, Cleaning Up The Environment: Neno Duplan, CEO of Locus Tech
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