Steve PapaSerial / Parallel Tech Entrepreneur

The Endeca Story

Sept. 2006

Oct. 2011

Rule #1: Ignore Experts “This will never scale”

– Computer architect ’99

“This is a science project” – Anonymous venture capitalist ’99

“It took me 3 days to build what they sold to Fidelity” – Ilya Gorelik, PTC

“Navigation is our core competency” – BN.com, 11/00

“This is just a GUI” – World’s #1 database expert, 2001

“I know a couple of Russian programmers that could build this in 3 weeks” – Harvard students, 10/01

“We already do this” – Amazon, 3/02

Perseverance Required “Is it right to take venture money

when the technology may never work?” – Endeca team member, Jan 2000

“What difference does a week make in closing our funding?” – Tuesday, Sept 4, 2001

“Who wants to be customer #2 of a venture backed software company in October 2001?”

“They are going to go out of business in 6 months” – Verity CEO, 3/02

“You can’t have folks sharing rooms at Demo 2001!” – PR Agency (we saved $3,000)

“You don’t have the balance sheet to rent this space.” – Real Estate agent, Fall 1999

Endure Self-Inflicted Doubt“We don’t even know if this product is any good”

Endeca board member, last “real” board meeting, July 2011

<3 weeks before $800M offer, ~6x revenue

May 1999

Phase 1: 5/99-11/00Getting to First Customer

“Basic research project” to bring efficiency to markets like eBay Got lucky bringing the right scientists together

Funding was during the Internet bubble (Spring of 2000) and easy Assembled great set of highly credible VCs and individuals

First customer was 6 week sales cycle…6 months to deploy

Wind in our sails….

HBS graduation

Endeca fo unded

Phase 2: 2001Getting to Second Customer

First year over year decline in IT industry spending EVER “I spent $8M trying to solve

that problem last year and I am out of money”

Ecommerce declared dead

Willing to solve any problem a customer threw at us Technology “platform” vision,

interest but no commitment

Built a leadership team with deep experience

Closed second round of financing the week after 9/11 Within 6 weeks of cashHow unlucky and lucky can you get?

Catching a “Falling Knife”Series A

Series B

Angel

Phase 3: From 5 to 100 customers

First 5 included the use of our “platform” technology for: Ecommerce Enterprise search Business intelligence

Ecommerce emerges as the painkiller….increases revenue ~ 30%

Despite great results still a recession, still need early adopters

“I already do this”

Phase 4: From 100 to 600 customers….

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

Fiscal Year

Revenue 47 478 2,473 5,787 14,859 34,962 67,000

% Growth n/ a 917% 417% 134% 156% 135% 100%

2000 2001 2002 2003 2004 2005 2006 est

Ecommerce + big ($) problems nobody else could solve

November 3rd 2006

Phase 5: Recession, Reinvention and Re-Organization

No customers have budget to solve “big problems” Detected as early as

October 2007 (unlucky) Raise $25M of funding in

Q4 2007 in 5 weeks (lucky)

2008 dislocation worst since the Great Depression

Forces us to recognize our platform focus missed the bigger opportunity as two distinct products

Two Endeca business units emerge in 2010: Agile Ecommerce = Endeca

InFront Agile Business Intelligence =

Endeca Latitude

Governor Patrick, July 2011

Phase 6: Exit – IPO or M&A?August 2011….

AAA US Treasuries?Europe?

Time

Running a public company

Hiring bankers

The Platform lives on!

Main lesson: Ideas, Figuring it out, and Execution

Ideas versus execution: Ideas are not in short supply

“Figuring it out” is the fulcrum Survivorship bias (crossing the

chasm, customers right?) Experience must be placed in

context Timing, territory, and talent

Cap table is a scarce resource – you need help

Relentless pursuit of credibility / Eliminate risk

General Principles taught, learned, and earned

Pursue markets you are passionate about

Macroeconomics, market cycles and investor sentiment matter

Always a good time to innovate but not always a good time for every innovation

An exit plan is more than a list of companies and IPO

More people you hire will be selfishly focused than not

“Coin operated sales” is not disparaging

Focus and running a 3 legged race where others aren’t

Get experienced help # people that can truly

help / # of people claiming they can 0 If its too good to be

true….it likely is

Repeaters versus creators

Doers vs. leaders

Intellectually curious vs. focused

Experience versus potential

Credibility versus talent…or both?

Luck Favors the PreparedLuck plays a bigger role than most will admitBut…

Work hard, do things you love to do, have fun and with some luck….you’ll become an “overnight success”