Sramana Mitra: What prompted that decision to sell?
Jon Hirschtick: It came down to three things. My criteria are winning the market, working with great people, and making money. Both routes made money. This could help us win the market. People like going public because they’re fascinated with it.
Going public puts you in a position where someone else can acquire you. We were worried about PTC or Autodesk acquiring us. I had to think about myself and my employees.
You get an offer of $318 million in 1997. It’s hard to go home and tell your wife, “We could have sold for hundreds of millions of dollars, but we’re going to wait and go public next year.” We thought this is a good chance to build our business, get a good return, and I liked the people there.
I stayed 14 years after we were acquired. There was no lockup. I could have left the next day. We had new incentives of course but they were nothing like the original round. I loved what we were doing.
I stayed 14 years. That tells you that it was a good place to be. That turbo-charged our success. When they acquired us, we were at about $20 plus million. Today, it’s approximately a billion dollars a year.
Sramana Mitra: What prompted you to leave eventually?
Jon Hirschtick: I love visiting customers. I would start hearing about all the problems they were having. Teams were becoming larger and distributed. People are running real businesses on SolidWorks. They talked to me about problems endlessly. Problems centered around a few areas. Installing and maintaining the software was a nightmare. It was a huge Windows app. It was very brittle. We gave them license code servers. License codes are a disaster. Installs are a disaster.
You have to install multiple pieces of software. It’s very finicky about device drivers. Half of our support loads were installation and device drivers. Then they’re trying to get everyone on the same version. That’s very hard.
Sramana Mitra: The exit barrier in CAD is incredibly high.
Jon Hirschtick: Yes. They have full-time employees handling it. It’s like having an elevator operator. The other problem was the data. We put the data in files. Our database was C:\. You end up with not one file but thousands of files.
For CAD, you have an assembly. You end up with thousands of parts and drawings with huge directory trees. Everyone needs their own copy of the tree to do any work. You end up with data strewn out everywhere.
Then it’s like, “Who’s got the latest version?” Products get built, but they get built with pencil and paper too. It got abandoned because there was a better way. We tried to fix it. We tried to write a better license code manager. Then I saw cloud, web, and mobile coming along.
I used Google Docs and I’m like, “Wow!”. This would be so good for CAD. There would be no files to copy. We wouldn’t need to lock files. In manufacturing, it’s 10x as important because there’s 10x as much data and 10x as many people. It was time to rebuild.
As soon as my mind went to building the next system instead of selling the previous one, it was no longer the right place to be. It’s not a good place to build a new generation. It was a great place to sell, sell, sell. I just knew the world was going to change. I left.
I can’t say I had the exact idea for OnShape. I had an inkling. I wanted to do something new. I knew I can’t do anything new in the corporate structure. I took a year off and started OnShape.