Multiple Pivots, Taking on Giants, to Over $100 Million in Revenue: Matthew Calkins, CEO of Appian (Part 3)

Sramana Mitra: You’re talking 2001?

Matthew Calkins: The Army project started in 2001. It got going in earnest in late 2001. We were still a portal company in the 2002 to 2003 timeframe. We had to get out of it. The portal market was, in the end, just as disastrous as the personalization market for different reasons.

Sramana Mitra: Why was that?

Matthew Calkins: There were a couple of problems. The portal was a feature and not a complete product in the eyes of the market. The portal was a great way to gather users and acclimatize them to your system, but the way companies want to make money on it was to give the portal away and to make money on all the applications that went along with it.

It was a bit like being in the razor business but not making blades. Everybody else is giving away the razors and selling the blade. All we had was the razor. We thought it was a great razor and so we wanted to charge a lot for it because ours was smart. This was completely at odds with the way the portal industry was being perceived. It was a commodity. It was low margin. You might even get paid to take somebody’s portal. We had the opposite impression but there was no money to be made in portals for us.

Those who specialized and stayed in it like Plumtree had problems. Plumtree used to run advertisements that said, “No empty portals” as if they had figured out. First of all, they admitted that the problem with their industry is no one uses these things. They were somehow going to protest against the fact that portals were empty. It seemed desperate. Epicentric was another competitor. It didn’t turn out well for these firms.

Sramana Mitra: How long did it take you to figure out that there was no business here?

Matthew Calkins: We saw the industry shift away from us. We were always looking for things where success could be a function of cleverness and not market clout or brand power. Clearly, we were in the wrong place. When portals went into the other direction, we had to reposition ourselves. We attempted to do something similar to what we had done in the first move, which was preserve this lovely intellectual property.

At this point, we also had a neat display. We had ways of presenting information to fill that structure with targeted information. We figured that we wanted to keep all this and we wanted to move to an industry where having this gives us an unfair advantage. We had document management  for storing all those orders. We had valuable routines. We needed to find an industry where there was going to be a high margin, and that would have a long growth curve that would continue to increase in value so that it didn’t eventually become the battle of the brands. We wanted it to be a battle of innovation for decades. It had to something where thinking would win. Also, it had to be an area where the assets we built so far would give us an unfair advantage.

I recall convening an executive meeting and having a mountain of briefing. We were all supposed to have read a thousand pages investigating 20 markets that we could apply ourselves to. Then we had a long weekend to decide which of these markets we should end up in. We chose business process management, which had already been going. The worst thing about business process management is that it was intuitive prior to the bubble burst, which means that it was funded with cheap money. As we entered the market, our top three competitors had between them $260 million of venture funding.

This segment is part 3 in the series : Multiple Pivots, Taking on Giants, to Over $100 Million in Revenue: Matthew Calkins, CEO of Appian
1 2 3 4 5 6 7