From Zero to a Market Cap Bigger than General Motors: Keith Krach, Founder of Ariba (Part 6)

Sramana Mitra: You left in 2003. Did you hand the reins over to somebody else?

Keith Krach: Yes.

Sramana Mitra: That was not the point when SAP acquired Ariba right?

Keith Krach: Yes, 15 years ago.

Sramana Mitra: Why did you let go of the CEO job? >>>

From Zero to a Market Cap Bigger than General Motors: Keith Krach, Founder of Ariba (Part 5)

Sramana Mitra: You were basically selling license software at this point right?

Keith Krach: Yes, we were selling license software. We said, “If we’re ever going to do this again, we’re going to pull as much expense as we can and push as much revenue out as we can. When it came to recognized revenue, I said, “How conservative can we be?” What we did was we recognized that revenue over a two and a half year period. We were booking these deals and getting cash. From a cash flow standpoint, we were cash flow positive from our second quarter of existence.

Sramana Mitra: How much money did you raise from Benchmark? >>>

From Zero to a Market Cap Bigger than General Motors: Keith Krach, Founder of Ariba (Part 4)

Keith Krach: Benchmark fund number one ended up being the best-performing fund in history. We started it. We were going to an offsite. I said, “Paul, can you do a prototype?” He said, “I can’t do a prototype until we talk to a customer first.” I said, “How many do you think we should talk to?” He goes, “I don’t about. About 50.” I go, “What kind of questions should we ask?” He said, “You’re the CEO. You figure it out.”

We went in and talked to customers. We just asked them two things. How are you doing it now? It was a mess. It’s a paper-based process. Then, what would be ideal? You could parametrically change the business rules. Maybe even use internet to hook up with suppliers. I go, “That’s what we’re doing.” >>>

Concept Financing for a Fat Startup: Tomer Shiran, CEO of Dremio (Part 5)

Sramana Mitra: So 2018, what kind of customer level did you finish at? Beside the regular stuff of getting your sales organization ramped up, was there any other strategic thing that you did that is worth a discussion?

Tomer Shiran: When we launched, we had both a free version of the product and an enterprise edition. The community edition is something that people can start using for free, but it doesn’t have the features that an enterprise would need. In our first few quarters, a lot of our focus was on building awareness and getting people to download our community edition and start doing things on their own. >>>

From Zero to a Market Cap Bigger than General Motors: Keith Krach, Founder of Ariba (Part 3)

Sramana Mitra: You started navigating the venture capital industry in Silicon Valley?

Keith Krach: Yes, that was my introduction. We had five venture capitalists. It got to a point where we were running out of money.

Sramana Mitra: Who were these people? This is 1989. This is a very immature industry from a venture capital point of view. Who were the guys who were willing to work with you? >>>

Concept Financing for a Fat Startup: Tomer Shiran, CEO of Dremio (Part 4)

Sramana Mitra: In the time that you’ve cracked the market for your early customer base, what has become the dominant use case of the product?

Tomer Shiran: It’s actually pretty diverse now. It’s very horizontal.

Sramana Mitra: So you’re selling to IT?

Tomer Shiran: Oftentimes, we’re selling to IT. We’re either selling to IT or selling to the data consumers. It’s typically a VP of Analytics or a Chief Data Officer. It depends on the organization. The types of customers are pretty diverse. >>>

From Zero to a Market Cap Bigger than General Motors: Keith Krach, Founder of Ariba (Part 2)

Sramana Mitra: What years are we talking?

Keith Krach: We’re talking 1981 to 1987.

Sramana Mitra: You were at GM until ’87 or longer?

Keith Krach: Until ’87. I was Vice President at General Motors and was running a division. It was time to move on. They keep you moving when you’re high potential. I didn’t want to go back in the auto business. I just took a flight and came out to Silicon Valley. I hooked up with a company called Chronos. It was doing enterprise software for the process industry. It’s an early ERP company. The server was an IBM 3090. The client was a Stratos computer. >>>

Concept Financing for a Fat Startup: Tomer Shiran, CEO of Dremio (Part 3)

Sramana Mitra: What was your experience in raising Series A?

Tomer Shiran: It was a very good one. We went through the process. We mapped out which investors we knew that we wanted to discuss this with. We probably met six or seven investors. A majority of them were interested in investing in the Series A. About a month later, we signed the term sheet with both Lightspeed and Redpoint co-leading our $12 million Series A.

Sramana Mitra: What drove that choice of Lightspeed and Redpoint?

Tomer Shiran: The first thing is it’s preferable if you can raise from tier one investors. They have the brand. >>>