Interview w/ Manoj Saxena, CEO of CommerceOne

Thanks for the opportunity Nathan.

I think it all has to do with passion. It was something I believed in, it was not as bad a risk as everyone thinks. If you read about it in the paper it looks like a crazy risk.

Well not that bad. It was a very calculated risk, it was a combination of things. One is the fact that the idea and the value of the business model was so powerful, I knew that we couldn’t go wrong in trying to launch it. What we didn’t know, was how long it would take for the market to recognize it. Second, I had a financial backing in the form of my wife who was working at IBM and had the ability to support our family. I knew I wouldn’t be forced to eat Raman noodles to survive, we had an income coming in which allowed me to focus on Exterprise. And most importantly she agreed to have those credit card debts paid off in 4 years if things didn’t work out. It was all driven by the passion, we knew the risk, we knew the rewards, and we decided to go for it! The third part had to do fundamentally with the timing for me on a personal level, with where I was in my life. You have to ask yourself, what time is it, and not look at your watch. It was one of those moments, the next generation (my daughter) is here, if anything I am getting older not younger, and I want to build a personal legacy for myself. Successful or not, at least give it a shot and have the courage to try. This seemed like the right time, the right idea, and the right city (Austin) for a V.C. (Venture Capital) to be able to do it. If I didn’t do it at that time, the 3M golden handcuffs would have become quite restricting. It was those three things that drove me to take a swing at it and go for it!

I wish I could say it was an Epiphany.

Yea, I could do that, but the reality was that at the core I believe in software being the basic fuel of growth for this economy. Much like the steam engine was for the industrial age. Software is that fundamental to the growth of our economy. I was looking for ideas that were strong and powerful that dealt with software. Second piece, when I met with the Co-Founder, Dr. Rana, he wrote in his Ph.D. about this type of software, how the technology can be used to do some process management. Which I was then able to correlate to business issues that I had found and was in the software domain and I knew would be the next variable application that would make ERP look like a walk in the park. All of these things came together at the right time.

It was a lot of hard work. For the first few months, we did consulting jobs at Motorola to pay the bills. Nothing to do with the area we wanted to attack. We looked at applying the same technology and applying it to different areas and creating new services. The epiphany was more about doing for business with software, what Cisco did with hardware. A network of business connected using software processes. Much like the Cisco routers connecting company’s networks to the Internet.

Hmmm, I hadn’t noticed. I think there are pieces that are very comfortable, in that 3M was a very entrepreneurial environment. 3M is a company where you get to do your own things and push your own ideas. There were two or three very difficult things with leaving 3M and founding Exterprise. No one cared what you did at 3M, in that in 7 years I had 5 promotions, one of the fastest track careers in all of 3M. In the end, no one cared when you left 3M. When you were out, you were out! That was one difficult part, establishing myself all over again. Second, was realizing the resources that were available at 3M, I used to tell the VP, when I would go back and visit, I can’t walk into the copy room anymore with the same sensation. Now there is over $12,000 of equipment here at Exterprise. At 3M I would just walk in and do it and assume that the resources were there! In a very resource poor environment, trying to operate was much more difficult.

Well, I still have some really good contacts at 3M. They still provide “samples”.

Exactly!

Well.

Absolutely not, I don’t recommend the debt route. I was able to utilize that option because of the scenario that I explained. Remember, that in my case is was not as bad as it sounded when people read it. I would say that the most important thing that people need to do is be VERY CLEAR about the economic value that your idea is going to create, and how much of that value you are going to capture. For example, Napster created a lot of economic value, but was unable to capture it! There are a lot of B2C, Content and Medical web sites that get traffic but how much of that value are they actually capturing?

Lots of things, but I also believe that there were a lot of good lessons learned. Let me tell you what I would do again, I would not only have a great and passionate vision, but I would continue to hire terrific people! We have grown from 5 to 170 in less than 2 years.

Thank you. We have lost less than 3 people on a voluntary basis over that time. We have lost some people to performance issues and such, but having an attrition rate of less than 2 percent in a market like this is incredible. A lot of it is due to our focus on getting solid players and giving them the room and challenges they want. That is what I would do again if I were to build another company. The things I would do differently or better. A lot of stuff. Believing a lot more in the idea than I initially did. Being more aggressive with my business plan, and ramping it up a lot faster.

I think so. I think we could have, we listened a lot to the VC’s who did not see a lot of the overall opportunity. They were looking at CRM (Customer Relationship Management) kind of things, and they were having a hard time understanding our market. Doubting ourselves in the beginning probably cost us a quarter worth of execution time. I think it is always a balance between being realistic about your business model and staying true to the core vision. Another thing I would do sooner is have brought on the Product Marketing function much sooner that I would bring on the Sales function.

I went and built up the Sales capability faster than I did the Product Marketing organization. I think functionally I should have kept them much closer together.

Exactly, Product Marketing is an extremely important function that needs to be brought in at the right stage. I would say even before you hire your first sales person.

I think clearly, that it is people who have an intense desire to win and succeed. It is skills, passion and attitude. It is the attitude that things can be done, that problems can be surmounted, skills that I have done it before, I know what is required to get it done! Passion about what it is that I am embarking on, and do I believe in it? Is it something that excites me to my core, will I have trouble sleeping? It has to be that level of resonance. The first 25 people of any company set the culture, create the gene pool moving forward. Where you make mistakes, you must be very quick in correcting those mistakes. It is one of the toughest jobs to let people go, but if they are not a good fit, you must do it!

Well, I don’t think that we have seen the bottom of it. I think that we will see a few more rounds of layoffs over the next couple of quarters. This thing is done yet.

No, not for awhile. I don’t think it has hit the bottom.

I think that over the next few years, that technology within this space will be the core driver for our economy. What is happening now, is that we are paying the price for our sins. For becoming too greedy, and hype driven. While there is business and economic value, it takes time to be captured in a companies P&L.

That is right, I heard someone say the other day; “It is like a forest fire, sometimes it burns the good with the bad”.

But they also really hurt the guys in the middle, who may have had an excellent chance at success. At the end of the day, Austin is a city that will continue to get a lot of venture capital. This is the place to be concerning quality of talent, quality of life style, resources, everything!

Absolutely, and as you know we were recently acquired by Commerce One, and that is clearly because of not only our technology but because of our strategic location in Austin. Commerce One, will actually begin locating more people in the Austin area because of that!

I think that the fundamental way to think about it is that Commerce One built the first generation of market based platforms. Which enabled transactions between multiple parties. What we are adding on top of that is the capability for a second-generation platform that enables not only the transaction, but collaboration before and after the transaction. B2B is not only about buying and selling, there is a lot of stuff that happens before the transaction is consummated.

Sourcing, negotiations, product design, etc. A lot of things that need to happen, and these applications of these technologies are not going to be in a traditional Enterprise application. These are a new class of applications that will be sitting BETWEEN companies. It is a new category, where market places are going to be created and people will connect through an internal system. People will connect into these market places and into these applications, to form these business networks. The marriage between the two companies is outstanding, because we have the core technology (as Commerce One says, this is an organ transplant for them) and the people to execute to it, while they have the brand and the global presence to be able to execute this on a global basis.

That is a very big market that we are going after. But we are also attacking medium sized business with revenue of between $100 Million and One Billion dollars.

By they way, that is a core skill that needed by any entrepreneur to be successful. Not only do you learn about what is needed to get a successful business going, but you also are able to leverage these relationships to execute more efficiently. In Austin there are three or four big mechanisms that people can leverage. One is, organizations like the Austin Software Council, the second are Associations that meet periodically, and third to meet with CEO’s and other Entrepreneurs directly and glean their insights and experiences.

It was my pleasure.