From Zero to a Market Cap Bigger than General Motors: Keith Krach, Founder of Ariba (Part 2)

Sramana Mitra: What years are we talking?

Keith Krach: We’re talking 1981 to 1987.

Sramana Mitra: You were at GM until ’87 or longer?

Keith Krach: Until ’87. I was Vice President at General Motors and was running a division. It was time to move on. They keep you moving when you’re high potential. I didn’t want to go back in the auto business. I just took a flight and came out to Silicon Valley. I hooked up with a company called Chronos. It was doing enterprise software for the process industry. It’s an early ERP company. The server was an IBM 3090. The client was a Stratos computer.

I was only there for less than a year. On my second day on the job, the CEO said, “I want you to say this to the Board of Directors.” I said, “I will not say that.” All of a sudden, I realized that I had made the mistake of my life. Leaving General Motors was crazy. I had as good a chance as anybody my age to be the CEO. If nothing else, pride would not let me go back. I learned a lot that year.

The issue was that my set of values didn’t agree with hers. I got a pit in my stomach and it was torture. On one hand, I didn’t really quit anything unless the mission was accomplished. On the other hand, I wasn’t living my values every day. I assumed everybody cared for those. That was naïve, but it’s probably the most valuable lesson I’ve learned in my life.

Every company I started after that had those values. If you don’t have your integrity, you have nothing. People can say you failed at this or failed at that, but they cannot take away your integrity. I quit when my oldest son was being born because she wanted me to come back right as the whole process was going on. IBM invested a lot of money in the company. I said, “No, I’m not missing the birth of my child.” I told her to do something that’s anatomically impossible to do. I said I quit. Here I am in Silicon Valley. I’ve got a big mortgage. I’ve got a son and a daughter. That was a pretty scary time.

Sramana Mitra: That was 1988?

Keith Krach: This would have been 1989. I just said, “I’m just going to treat it like a business plan and do the five P’s. Back then, you wrote letters. I was writing to any network I could. I ended up being introduced to these four Ph.D. research scientists out of IBM Research Labs that had come up with breakthrough technology in mechanical computer engineering. They really needed a business guy.

When they showed me what they could do, I said, “If you can really do that, it will revolutionize engineering design.” It ended up being an amazing company. I said, “How long is it going to take to develop that product?” They said six months. It was about two and a half years. During that time period, we built up and created a category. We were loaded when that product came out.

Sramana Mitra: How did you finance that company?

Keith Krach: Through venture capital.

This segment is part 2 in the series : From Zero to a Market Cap Bigger than General Motors: Keith Krach, Founder of Ariba
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