Intelligent Energy Infrastructure Entrepreneurship 101

Toronto 2008-12-03

From Intrapreneur to Entrepreneur

Ray Simonson CEO – Coreworx Inc.

Background –  1948 - First of ten Children –  1966 - UBC Honors Math and Physics - Flunked out –  1967 - Lumberjack BC and Teamster Toronto – 6 years –  1973 - System Design Engineering at U of W (3.5 Yrs)

–  Ran out of money = Dropped out –  1977 - University of Waterloo Computing Centre

–  Building Hardware and writing low level software –  1979 - Mutual Group of Canada

–  12 years in Technology and 4 years Administrative Management

–  1995 – Partner - Ashburnham Group – Document Tech Consulting –  1996 – Bluegill co-founder and CTO - Sept 1996 to March 2000

–  BlueGill pioneered first EBPP software solution , First commercial XML app

–  2000 - CheckFree – SVP and CTO –  Highest performance Web based Statement application

–  2004 - Tech Capital EIR –  2005 - CTO Software Innovation –  2006 – CEO Software Innovation (now Coreworx Inc.)

Entrepreneurs

•  A person who organizes, operates, and assumes the risk for a business venture.

•  Entrepreneurs are optimistic and future oriented; they believe that success is possible and are willing to risk their resources in the pursuit of profit.

•  They are fast moving and flexible, willing to change quickly when they get new information.

•  Entrepreneurs are persistent and determined to succeed, because their own money and ego are at risk.

The Intrapreneur Opportunity

Corporations must innovate to survive; •  the best method is to encourage creative

people to become entrepreneurs within the company structure ("intrapreneurs") by allowing them to earn the freedom and resources ("intracapital") with which to pursue their visions (establish "intraprises").

Intrapreneur

•  An intrapreneur is an entrepreneur within a large firm.

•  For the intrapreneurial employee, advice abounds. They are advised to be courageous, moderate risk takers, frugal, flexible, and creative about their pathway.

•  Their task is to put together a team of enthusiastic volunteers, build a network of sponsors, and ask for advice before asking for resources

10 commandments for intrapreneurs:

•  Gifford Pinchot's 1985 out-of print book " Intrapreneuring, Why You Don't Have to Leave the Corporation to Become an Entrepreneur" provides 10 commandments for intrapreneurs:

•  Do any job needed to make your project work regardless of your job description.

•  Share credit wisely. •  Remember, it is easier to ask for forgiveness than permission. •  Come to work each day willing to be fired. •  Ask for advice before asking for resources. •  Follow your intuition about people; build a team of the best. •  Build a quiet coalition for your idea; early publicity triggers the

corporate immune system. •  Never bet on a race unless you are running in it. •  Be true to your goals, but realistic about ways to achieve them. •  Honor your sponsors

Intrapreneurship Helped Me

•  Technical training •  Financial experience

–  Budgets, performance plans, costing

•  Management experience •  Personal development

–  Communication –  Facilitation –  Personality Styles

•  Contacts –  IBM –  Xerox –  Xplor

•  12 Potential new careers

ADF - The Transition - 1994

•  ADF – Automated Document Factory (Gartner Group)

•  at Mutual Life we had built the most sophisticated ADF on the planet. – We merged a traditional in-plant print shop

with the Computer output group, the mailing machine functions, the copier functions and some sophistciated computer programming

•  This allowed us to create more sophisticated documents at less cost than any of our competitors or any of the service bureaus of that time

The Plan

•  Sell ADF service to other in the community – Economical, Manulife…

•  Better Yet – Spin it out •  A team was assembled to plan the spin

out – Finance – Legal – HR – Management Consulting

The Proposal

•  After a years work –  Plan presented to TMG mgmt cmte –  Turned Down!

•  I decide to leave Sept 1995 –  Tried another shot at getting the ADF out –  Working with IBM and a Toronto Service Bureau

we propose to manage the TMG ADF , buying the equipment, adding more modern equipment and managing the staff who would remain TMG employees

Consulting

•  Working with the Ashburnham Group is fun •  A-list customers

–  IBM Printing Systems Division –  Xerox Printing Systems Division –  Commercial Union Insurance –  Private Service Bureas

•  Lots of Travel –  UK, Scandinavia, South Africa, USA

•  Learned a lot about international business and running a small consultancy

The Decision

•  August 1996 •  Consulting is fun but hard work and not

as profitable as I would like •  I look at many opportunities

–  IBM Consultant –  Industry Job – Big Printer Mashup Startup – BlueGill

The Beginning

–  Founded September 1996 with $400,000 •  Hal, Ray, Vinay, Tom Kinnear and 4 Investors

–  HQ in Ann Arbor (Hal’s Garage) –  Development in Waterloo (Ray’s Basement) –  Goals…

•  Converge Internet Delivery and Document Production Technologies

•  Market leader •  Technology leader

The Idea…

•  Provide Software Solutions To Transform Legacy Billing And Statement Systems Into Interactive Web Applications For Managing Customer Relationships And Transactions.

•  Or turning client snail mail into an internet application to improve receivables, cross selling and customer service while reducing cost

Management Team

•  Hal Davis – Marine Biology degree, Michigan MBA –  VP Marketing ISI – Print & software vendor –  Rock Band Leader –  Employed by Defense Contractor re: nuclear triggers

•  Ray Simonson – no degree (yet) –  IS Executive – Large Canadian Insurance Company –  Computer Consultant/Technician – UW –  Teamster & Lumberjack

•  Vinay Gupta - Economics and Michigan MBA –  M&A guy for Cabletron – Network Company –  Regional Manager for Asia Pacific – Cabletron –  Small Business – Networking Services Chicago

Hiring

•  Sep. 1996 Hal, Ray and Shannon •  Oct. 1996 John (Sales) Erik (Dev) •  1Q97 1997 Steve, Paul, Shannon, Rick,

Tony -Dev •  2Q1997 Vinay, Mike & Kelly •  Small team until June 1998 ?

Business Strategy

•  Sell to Internal Document Groups – Print and Mail – expense reduction

•  Trade Shows and Conferences – The “VISIONARIES”

•  Talk to Analysts – To Develop the Market –  Strart small –  Get to Gartner level

•  Business Contacts –  Ameritech 1996,1997 –  IBM

•  Pursue IBM partnership (3 points) •  Create a Product for Service Bureaus (now ASPs)

– Special Pricing, Training, Collateral, Help Sell

Market Positioning

Market Positioning

•  Quadrant I •  “The new product - new market territory is the

classic yet very difficult path taken by pioneering, technology driven entrepreneurs. These individual take all the arrows in the back, often only to have new market entrants quickly exploit their expensive ground breaking efforts.

•  Of course there have been some big success in this area but their have also been some very big failures.”

•  Michael L. Baird •  Engineering Your Start-Up •  ISBN 0-912045-48-5

How do you Build the Market

•  Seminars & Conferences – Offer to Speak as an expert – Trade Speaking for Booths and Perks – Run Workshops before conferences

•  Partners – IBM - Gerstner •  Use your reference Customers •  Do it Again and AGAIN!

Finding Customers

•  Partner – Ameritech 1996,1997 •  Trade shows

– Moore BCS •  Business Contacts

– Xplor got us to big Insurance and Banks •  Friends Business Contacts

– MBA Network •  Industry specific conferences

Channels

•  Lasercom – Small European CSF reseller – Swisscom, Deutchposte, EDB Oslo

•  IBM – AT&T B2B – Guardian B2B – …

•  * We Did Most of the Work

What Do You Have To Do

•  Develop Sales & Marketing Strategy And Be Prepared to Change – From Document Group to Marketing Group +

Web Group •  Develop Quickly – To Keep Up With Sales and

Marketing – CitiBank •  Must Keep The Customer Happy

– Close Down Development If You Have To – High Level of Support – Someone has bet on

you! •  Max Out Your Credit Cards •  Manage Cash

Early Funding (1000)

•  1996 – Founders $400 K •  1997 – Angels $600 K •  1997 – Employees $100K •  1997 – ISS $350 K (long night) •  1998 – Arbor Partners $600 K •  Cash Management: Pay order

–  Employees –  Supplier –  Execs

Comic Relief

•  IBM Chase – NYC •  No working Credit Cards

1998

•  May – Had raised about 1.7 $ – Offer to Purchase – Sweetheart Deal – Also looking at a VC Term sheet for 5.8M

•  June 1998 – Accept $5.8m Menlo Ventures & Morgenthaler Ventures offer – Started hiring – Bought better gear

1998 – 20 Customers

•  Chase - 45 days - BSP with Spectrum •  CitiCorp - BSP - CMI - Transpoint •  US Bank - CSF •  Capital One •  Cellular One •  Putnam Investments •  Trimark Mutual Funds (Canada) PDF •  Cable and Wireless (UK) •  EdoTech (Barkleys Bank) UK

Partners

•  Value Added Resellers: –  IBM – LaserComm - Europe – Xerox – EDS – M&I Data Services

•  Service Bureaus – Moore – Standard Register – Vestcom

1999

•  2nd Round $20M – Valuation of $60,000,000

•  BlueGill is “Market Leader” (Gartner, DocuLabs, GIGA, Forrester …) – There are Now Some Tough VC Funded

Competitors •  Offices in London and opening Singapore •  50th Customer By November •  100 People By Year End

–  45 Development –  55 Sales, Marketing, Support, Professional

Services

December 1999

•  Issues With Rapid Growth – Could No Longer Manage Day To Day – Development Was Getting “Rayed”

•  Hired New Management People – Marketing EVP – Customer Services VP – Development VP – Product Management VP

•  Looked for New CEO – VC Suggestion

December 1999

•  About to Acquire #2 Competitor – 1 day

•  IPO Planned for Mid to Late 2000

•  CheckFree Make an Offer for BlueGill –  Dec 20th – offer accepted! – April 30th 2000 Deal closes – Tech Team has to stay – Everybody is happy and wealthy

What worked

•  Teamwork and Trust – Complimentary skills

•  Strong Marketing – BofA visit

•  Strong Technology Team – 6 of us beat much larger offshore competitor

•  Local marketing made it easier to hire •  Work hard but have fun •  Go big or go home

Company Culture

•  Communicate a lot (travel) •  Everyone Knew Everyone •  No Task Was Beneath Us •  Work Hard – Play Hard

– Company parties for employees and families

– Bumper Ball, Paintball… •  Easily attracted top people in all areas

Advice

•  Hire The Best Employees – GH Smart theory

•  Hire experienced Lawyers & Accountants

•  Engage the right partners and support them properly

•  Compartmentalize – Personal vs work

•  Never give up

Questions?