From Croatia to Silicon Valley, Cleaning Up The Environment: Neno Duplan, CEO of Locus Tech (Part 5)

Sramana Mitra: What was the structure of what you were selling? Were you offering company specific information, or was it an Internet front end to a centralized data store?

Neno Duplan: It was centralized web-based model based entirely on multi-tenancy. We had a single database for every client but a common interface. The database was common, but the data was coming from different sources. This allowed for us to segregate company data to ensure they could not see each other’s data. It was a huge step compared to the previous 10 years, during which time we created numerous silo applications.

Sramana Mitra: How much were you charging for these applications?

Neno Duplan: Initially our bread and butter was consulting, and it stayed that way for several years. Our consulting fees were very high, which made us highly profitable. Every penny of our profits went into developing software. By the year 2001 we had started selling the software to companies for which we did not do any consulting. That is when we really started taking off. It allowed us to get clients anywhere in the world.

We had scaled up nicely over the years and had developed proven methodologies with our clients. The software product allowed us to extend that domain knowledge globally. We were confident we could sell it on a broader scale. After the Sarbanes-Oxley act came in 2003 we gained a huge amount of momentum. Environmental projects are very expensive, and companies carry a line item called ‘environmental liability’ on their balance sheet. Chevron and other companies at their level have billions of dollars on that line. Before 2003, nobody cared how these companies arrived at that number and as a result that number was highly manipulated from quarter to quarter to help meet financial reporting objectives.

After 2003, CEOs and CFOs of publicly traded companies were personally liable for their signatures on the bottom of the balance sheet. Suddenly every single line had to be auditable. That became an unexpected driver for our business. I never would have imagined that the SEC and CEOs would be driving business to our company. We had envisioned a future where we would have a very slow sales process which went through the environmental managers at the different plants. The Sarbanes-Oxley turned everything upside down, and we suddenly had CEOs calling us asking if we had all the data we needed.

Sramana Mitra: How did companies find out about Locus Technologies in 2003 after the Sarbanes-Oxley act was put in place?

Neno Duplan: We marketed ourselves through trade magazines and industry conferences. I did not realize the importance of marketing. We could have become a much larger company if we had invested more in marketing. It took us a long time to understand that it is not only about engineering and building a good product. It is also very important to market that product and let the world know that you have it. We did a terrible job on that initially. Until 2007 there was no competition in our space. There was nothing sexy about environmental data. It was not on the radar of folks like SAP and Oracle.

When climate change, carbon exchanges, and all these other environmental issues came to light, we suddenly found ourselves surrounded by hundreds of competitors. Some of them were very well funded by major VCs. Companies that had been in business for two months were putting their adds everywhere claiming to be the world leader in our space, and as a company that had 10 years of true domain leadership in this space, we should have been in that conversation. We had a great story but we did not know how to place it. These other companies were getting headline news about raising 20 million dollars in the environmental data space. It was like a new bubble was being created in carbon management and energy management. Since then we have spent significantly in developing a sales and marketing organization, and we are fortunate to have taken those steps before it was too late.

This segment is part 5 in the series : From Croatia to Silicon Valley, Cleaning Up The Environment: Neno Duplan, CEO of Locus Tech
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