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From Zero to a Market Cap Bigger than General Motors: Keith Krach, Founder of Ariba (Part 1)

Posted on Monday, Jan 14th 2019

Ariba was the first B2B internet company in history. In this interview, we go back through one of the iconic ventures that shaped Silicon Valley, paving the way for much that came later.

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 circumstances?

Keith Krach: I was raised in a small town in Ohio right outside of Cleveland. My father had a five-person machine shop in the good times. It was just me and him in the tough times.

Sramana Mitra: Watching your father do his own small business was part of what drove you towards entrepreneurship?

Keith Krach: I think so. The dream was always to go off to college and get an engineering degree and then come back. I never ended up doing that. I went to General Motors after they gave me a scholarship at Purdue. I learned a lot. I started welding at 12. I certainly learned a lot about manufacturing. I really learned a lot about entrepreneurship and leadership from my father. He risked it all.

Sramana Mitra: I’m an entrepreneur’s daughter as well. My father started a shipping company. It’s one of the first container shipping companies in India. I watched him be an entrepreneur all my growing up years. I think it’s a very big driver in people who grow up as children of entrepreneurs.

Keith Krach: It really is. He was a field salesman for a lot of years. I’ve been watching him. He had a chance to start his own business. My mom just told him, “Damn the torpedoes. Full speed ahead.” My father was just so happy being his own boss.

Sramana Mitra: Ariba comes right after General Motors, right?

Keith Krach: Not actually. There were two other companies after that.

Sramana Mitra: Let’s go chronologically then. What happened in General Motors after Purdue?

Keith Krach: While I was at Purdue, they gave great summer internships. I was a second shift foreman on a production line in Detroit. I got a chance to see the plant floor. Then right after I graduated from Purdue, they sent me off to business school on a fellowship. I worked for a while on their New York Treasurer’s office. It’s basically the place where they have their Board of Directors meeting.

Rick Wagner, the guy I worked for, ended up being the CEO and Chairman for 10 years. I got to see the very bottom and the very top. When I finished business school, I presented that to the Board of Directors and was probably 24 years old.

Sramana Mitra: How did you get access to the Board of Directors at GM at 24 right out of business school? You went to HBS, right?

Keith Krach: I worked there the summer before.

Sramana Mitra: But you had access to the Board?

Keith Krach: The finance staff, a lot of it is staff to the Board and the top executives. I had gotten to know a few of them. When I graduated, I was working at the GM Tech Center. We had very sophisticated robot technology. The guy who was my sponsor was VP of the manufacturing staff for my Harvard fellowship.

When I was ready to graduate, he said, “What do you want to do?” I said, “I just wrote a mini-thesis on the utilization robotics of the Japanese auto industry. I got a passion there.” He said, “We have some of the most sophisticated robot technology in the world in our research labs. We don’t know what we’re going to do with it.” I was in. I did the presentation to the Board of Directors. They asked how we should do it. I said we should joint venture with somebody who’s got a wide product line and how owns the NC controller market. That was in Japan.

I called up the CEO. He was there within two days where we put together a 50/50 venture between General Motors and FANUC. Now it’s the world’s largest manufacturer of industrial robots. The average age of that joint venture was about 28 years old. We put GE, IBM, Westinghouse out of business and became the dominant player. We grew at a tremendous rate.

This segment is part 1 in the series : From Zero to a Market Cap Bigger than General Motors: Keith Krach, Founder of Ariba
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