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Building a Pre-IPO Company Over 10 Years: Centrify CEO Tom Kemp (Part 2)

Posted on Tuesday, Apr 8th 2014

Sramana: I remember NetIQ very well, but a lot of my readers may not. Could you review the premise under which you founded NetIQ?

Tom Kemp: NetIQ was a systems management company around the Windows platform. At that time Microsoft had come out with Windows server and they were coming out with server applications such as Exchange and SQL Server. At NetIQ, we believed that those applications would become mission critical platforms. We felt that e-mail with Exchange would be very important and that people would be very upset if there was poor performance or if the product went down.

We built products to monitor the servers and the Windows platform. We built the product the right way and we addressed a real pain point. From our prior experience at Ecosystems, we knew that it would be very important to have a must-have product. It had to be a product that scratches a real itch. It was a combination of building the product the right way the first time and addressing a pain point. We then had to be ready to ride a wave, and in the mid 1990’s that wave was Microsoft going into the datacenter. Four years after we formed the company, we were able to go public in July 1999. I left the company in 2003. It was a phenomenal entrepreneurial experience to be able to be a part of starting that company.

Sramana: What was your role in that company?

Tom Kemp: Initially, I was the VP of Marketing. I eventually became the General Manager and ultimately ran strategy and corporate development as well. The next thing that I wanted to do from a career perspective was be the CEO. I had done sales and managed engineers. I had done marketing and the next thing on my bucket list was to start my own company and be the CEO. After I left NetIQ in 2003, I took some time off and then became an EIR at Mayfield before founding Centrify.

Sramana: Was Mayfield an investor at Centrify?

Tom Kemp: No they were not. NetIQ was bootstrapped and then we got some rich people in Asia Pacific who knew the founders to put some money in as well. In the end, NetIQ only raised $12 million and was able to go public in July 1999.

Sramana: At what point in the company history did you raise the $12 million?

Tom Kemp: There was an initial round of financing when the company was formed in 1996. Before the company went public, we raised another round of financing. In those days, we only had $21 million in sales in trailing 12 month revenues. The IPO borrow was much smaller. You did not have to raise as much capital. Nowadays, the IPO bar is $75 million to $100 million. It is almost three times what it used to be. What you are seeing now are that most companies that go public have raised over $75 million. Everyone talks about how cheap it is with AWS but it still takes a lot of money to build a company that can be significant.

This segment is part 2 in the series : Building a Pre-IPO Company Over 10 Years: Centrify CEO Tom Kemp
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