Building an IPO-Ready Identity Software Company from Colorado: Andre Durand, CEO of Ping Identity (Part 2)

Sramana Mitra: How long did this continue?

Andre Durand: We actually did about $600,000 worth of business that first year.

Sramana Mitra: That’s pretty significant. These were all from newsletter ads?

Andre Durand: This all began with a black and white, half page advertisement that went into a little newsletter of 20 pages that shipped once a quarter to about 5,000 bulletin board operators.

Sramana Mitra: Wow! That means that you tapped into a real need in the market. Who were these people who wanted to buy your software? What did you learn about the customer base?

Andre Durand: I don’t know if you’ve ever actually met a bulletin board operator, but I think probably all the visuals of a person sitting at home on a Friday night drinking Coke and programming on their computer and watching people dial in to their bulletin boards fit. It was a pretty geeky crowd. Amongst the geeky crowd, there were a lot of wannabe entrepreneurs. Bulletin boards were semi-analogous to early ISPs if you remember that era.

When the Internet hit, all of a sudden, every bulletin board operator became their neighbourhood Internet service provider. This was pre-AOL becoming an Internet service provider. It was a little cottage industry of individuals that were providing access to the Internet. Those people and the bulletin board operators arecut from the same cloth. They really were some of the pioneers of getting online. It was a developer crowd or a computer nerd crowd.

Sramana Mitra: In the first year, you said it went to $600,000. Did you continue in this business of supplying photo database software to these bulletin board operators?

Andre Durand: Yes, we did. We grew that business and later on realized that we could do better than a DOS bulletin board. Windows NT 3.51 had come out at that time. We said, “How about we built an all-Windows bulletin board?” Think AOL in a box for Windows. We did that. At its height, I think it was probably about a $5 million business.

Sramana Mitra: That’s pretty substantial. What year does that bring us up to?

Andre Durand: That brings us to 1998. That was the few years leading to the dot com era of 2000. By then, the Internet was in full force. The nature of our phone calls began to change. People started asking us, “Is this like a web server? Is your client a web browser?” I knew we were in trouble at that point.

Sramana Mitra: The technology was shifting.

Andre Durand: Yes. We don’t have bulletin boards today. Back then, it was Prodigy, CompuServe, and AOL. We started to make the shift, but we weren’t well-capitalised to make that shift. I decided that it was time to sell. I sold it to a small public company here in Denver. The deal wasn’t even consummated. We sold it, essentially, for stock. I remember at the time of the deal, the share price that we were exchanging at was $8.70. It was about a $10 million deal.

Sramana Mitra: That was what year?

Andre Durand: January to February 1998.

Sramana Mitra: The dot com bubble is starting to really heat up and you have a $10 million exit.

Andre Durand: In theory, I have a $10 million illiquid exit. I can’t sell for a year.

Sramana Mitra: You have locked-up stocks.

Andre Durand: Yes. A year later, that $8.70 is $52.

Sramana Mitra: Wow!

Andre Durand: So the $10 million deal was a $52 million deal on the day that the lock up ended. Two months after that, the stock was $72 so now it was a $72 million deal.

Sramana Mitra: You held on to the stock?

Andre Durand: Here’s the good news and the bad news of all of this. I was not an executive at a public company subject to blackout dates. It’s not like I could sell shares like everybody else. The short of it is, my investors won the jackpot and cashed out well north of $30 million. I watched my stock account in e-trade that, in theory, was tradable. I watched my share price run up to just shy of $10 million, and like everybody else, back down to close to not a lot.

The interesting and fun part of this story that leads to Ping is my best friend who I grew up with in Santa Barbara invested $30,000 of his trust money in the bulletin board company. This was 1999. He was living in St. John Island in the Caribbean working at the Westin hotel. He’s working in the beach hut renting floaties. He was earning minimum wage but living on a beach.

He gets a call from his stockbroker saying, “You know that stock you put in your account four of five years ago. I think you should sell a little bit of that.” He said, “What do you think?” The stockbroker said, “Maybe half and leave the other half in there.” This is $30,000 invested five years earlier. The broker calls back and says, “The transaction is done. Where do you want to wire the money?” He goes, “How much money?” It was $892,000.

Within a couple of months, he buys a 50-foot sail boat, which is the original reason why he and I got in business together. As kids we said, “We’re going to sail around the world but we need to buy a boat.” Ten years later, he now has a 50-foot sailboat and I’m married living in Denver. On October of 2001, a year after he bought the boat and fixed it up to be truly around-the-world sail-worthy, I get an email from him. It was a very cryptic email because it was text sent over short-wave radio and someone typed it to an email address. The email essentially said, “Got the boat. Your freakin’ idea?”

By that point, I had started my second company. About two years prior to that, I had started a company called Jabber Inc. to commercialize an open-source project that a gentleman named Jeremy Miller and some other extremely bright people had started. I said, “Why don’t we build a company around it?” I was starting and building this company called Jabber and it’s going extremely well, but I got this email. I said, “It’s been 10 years since I took any time off. I’m coming out, but with my wife.” I went out to his boat, which was parked off of Venezuela. I went out and we spent six weeks on the boat and that’s where I thought of Ping.

This segment is part 2 in the series : Building an IPO-Ready Identity Software Company from Colorado: Andre Durand, CEO of Ping Identity
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