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Multiple Pivots, Taking on Giants, to Over $100 Million in Revenue: Matthew Calkins, CEO of Appian (Part 1)

Posted on Monday, Apr 18th 2016

Matt’s first couple of bets didn’t pan out. The story is interesting on many levels, the pivots being two critical ones. Also interesting is how the company managed to compete with much better funded competitors and win.

Sramana Mitra: Let’s start at the very  beginning of your journey. Where are you from? Where were you born, raised, and in what kind of background?

Matthew Calkins: I was born in Hartford, Connecticut and raised in California. There’s nothing particularly of interest about my background. I went to a public school. I was not a technologist but I appreciated technology growing up. That carried me when I started my degree though that was also not in Computer Science. I am an economist by training. I’m interested in technology because it is so impactful on society. It’s complicated. It’s fascinating but it’s also a way to change the world.

Sramana Mitra: Where did you go for college?

Matthew Calkins: Dartmouth.

Sramana Mitra: What did you do right after college?

Matthew Calkins: I went to join a technology company in Northern Virginia near Washington DC. They’re called MicroStrategy. They were an early leader in analyzing the contents of relational databases.

Sramana Mitra: How long did you stay with MicroStrategy?

Matthew Calkins: Five and a half years – most of the 90s.

Sramana Mitra: What role did you play there?

Matthew Calkins: Almost all of them. MicroStrategy was short of resources and growing quickly. I was put into a position for which I wasn’t qualified, which was wonderful for me. I did some marketing. I did some professional services and sales engineering. I ended up in product management. By the end, I was the Product Management Director in charge of essentially all the products that made money at MicroStrategy.

Sramana Mitra: What happened after that?

Matthew Calkins: I left in order to start my own business. I left at an awkward time. The stock was going through the roof and no sane person should have left when I was leaving but I felt strongly that now was the time.

Sramana Mitra: What year are we talking?

Matthew Calkins: 1999.

Sramana Mitra: The top of the market absolutely. What was your idea that you were going to go build as far as your own company is concerned?

Matthew Calkins: The funny thing is I quit and I didn’t have any idea. I had great confidence. Hubris was in the air back then. I think everyone thought that they could build something but I never felt that what we would build – the plan – would be the most important component. I launched when I felt that I had a general direction and the right people with whom to start the business. I started the business with three friends. I felt that they were terrific business partners. More than the business plan, that was the foundation I was looking for.

Sramana Mitra: You were doing this in the Washington DC area?

Matthew Calkins: I was.

Sramana Mitra: What did you do?

Matthew Calkins: We started out, literally, just thinking about what we wanted to be. We had no business plan. We hadn’t written anything prior to leaving our jobs. At that time, I thought it would have been inappropriate to do any kind of preparation before I resigned. My preparation was really nothing with regards to what the business would do.

We studied the market. We looked for places where determination and cleverness could build a great business. We found personalization. Personalization seemed a great little market. It involved developing Bayesian algorithms in order to match people with items that corresponded to their profile as demonstrated by their prior selections or stated interests. It was also determined by comparing their profile data to find similar profiles so that the things these people enjoyed would be recommended to the requester.

It seemed like a great idea. Largely, I thought that this was going to be quite successful. It was all about cleverness. We were going to write a great algorithm. We were going to optimize the speed at which data would be analyzed. We were data guys. This was going to be an ideal business. Personalization did not last, however. It was a casualty of the bubble burst.

Sramana Mitra: At that time, it did not last.

Matthew Calkins: There is a resurgence only after a long time.

Sramana Mitra: Yes. In 1999, it didn’t work.

Matthew Calkins: No. Do you remember when Netflix had to put out a million dollar bounty for someone who could write an algorithm for making good movie recommendations? The reason they had to do that is because the industry that should have been there to give them that algorithm had been destroyed in the bubble burst.

Sramana Mitra: So your first startup didn’t work?

Matthew Calkins: It didn’t work. We quickly pivoted out of it. We knew it was time to go when every one of our clients was defaulting on the money they owed us. I joke. It was quite obvious that the market was not going to thrive. We even used to have an index on our website. We called it the Appian Web Personalization Index.

It was like an amalgamation of very publicly-traded personalization-related stock. When we started the business, the index was spiking up, and then it absolutely crashed. It looked so bad that we had to take it off the website. The combined market cap of every company in personalization was approaching zero.

It was clear to us that this industry was not going to be a good place to stay. We moved from that into portals. I’ll briefly explain why we would do that. We wanted an industry that would leverage what we had built and also overcome what was wrong in our first industry. After all, personalization wasn’t a perfect idea. You had to invest in it before you got any results.

It would be better if the investment was already made in some way. What if, or example, the personalization was seeded with information known about you by your employer? Then you could skip that awkward first part in which you had to make the investment and you could go right to the benefits. Personalization is still a great idea but we’re going to do it in the enterprise instead of outside and we’ll be a portal company. We’ll put the intelligence behind it. We’ll be a portal that’s responsive to who you are and knows enough about you to give you the information that suits your interest, profile, and duties.

This segment is part 1 in the series : Multiple Pivots, Taking on Giants, to Over $100 Million in Revenue: Matthew Calkins, CEO of Appian
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