Democratizing Marketing Automation: Act-On CEO Raghu Raghavan (Part 2)

Sramana Mitra: Where did you go after Mentor Graphics?

Raghu Raghavan: By 1999 the company had become quite large, so I left and joined the Wyatt Company,which was a HR consulting company. They wanted to build large HR systems on PCs. I could not get Mentor Graphics shifted over to PCs because they thought they were toys. I knew PCs were going to take off. At the same time PeopleSoft was getting started. We did the pension and benefit portion while PeopleSoft did the HR management piece. It had a PC front end and an Oracle back end. It was a lot of fun. The pay was fantastic and it was a good life, but I got bored although I enjoyed the traveling.

Sramana: Consulting is a good experience.

Raghu Raghavan: It is a great experience. I would not trade it for anything. It is a great thing to do, but I started getting the itch to do high tech again. Luckily, I had the freedom to do whatever I wanted courtesy of Mentor Graphics. I rounded up some of my colleagues from Mentor and proposed that we start a boutique firm where we could focus on projects we wanted to work on.

Mentor Graphics, in its day, was an early adopter of C++, so when the group of us got together, we started building C++ libraries for fun. We built libraries for functional challenges like FTP. We then licensed those libraries and it was a great income, even though we did not need the money. When Java came out we started building Java libraries for fun. Before long we realized that there were companies getting built off our software libraries, so we decided take a more focused approach and my company, Responsys, came to be. This was around 1997.

Initially we thought about dealing with sorting incoming mail messages. When we talked to a few prospects they all seemed more concerned about outgoing mail and how to deal with that. On the technology side I had become disenchanted with Java on the client, but on the server side it worked great. We had a base of technology and knew Java inside and out. We entered a space that was somewhat mature such as MarketFirst, but they were really off to the side doing analytics.

Sramana: How far did you take it before you decided to sell the company?

Raghu Raghavan: Not far at all. This was in the dot-com days. We held four or five meetings and had an $8 million term sheet. We had technology but nothing working.

Sramana: Thankfully, a lot of things that were possible in the dot-com days are no longer possible.

Raghu Raghavan: What was neat was that when we did our B round, we had a lot of customers and we were able to close our round in a single day with RedPoint. The company grew rapidly. We got to $20 million in two and a half years. Prior to the bust we did start seeing some signs; we were losing customers such as eToys. All of our customers were dot-com customers. For three years we were losing customers as fast as we were gaining them, but the company held its own.

This segment is part 2 in the series : Democratizing Marketing Automation: Act-On CEO Raghu Raghavan
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