ArsDigita: From Start-Up to Bust-Up (or the story of the fall of Icarus) - part I
Many, many years ago (in web terms — long before our era 2.0),
Once there was one very interesting company. It was still in those times when
there were no google campuses, the apple apple was still overflowing with many colors, and the sun and
SGI was still considered a super machine.
At that time, for many geeks and nerds, ArsDigita was about the same beacon,
what is now google. Many have grown up on the book by Philip Greenspun
Philip and Alex 'Guide to Web Publishing and His Short Works
SQL for Web Nerds and Tcl for Web Nerds . For many, the hobby of the photo was the same
inspired by Phil .
ACS (ArsDigita Community System) was the first open implementation platform for
building sites, whether it is CRM, portal, CMS — in general, any application,
community oriented. The choice of architecture for implementation
This platform may seem strange in part (especially for the Russian
reader) —ACS was written in Tcl , and used AOLServer as
web server. However, if you read the articles above, you may
understand why.
')
For those who are interested, ACS still lives mostly like OpenACS , completely
migrated to postgreSQL instead of oracle (although oracle is still
supported). All assets of ArsDigita were bought in 2002 by Red Hat , but on
right now, what was supposed to be Red Hat Contacts and Content Management
System (CCM) no longer exists.
This translation is dedicated to the history of this company, its formation and its death (part
first of three).
***
If you happen to be near the Delaware court in the last few
days, then you may have heard about the lawsuit of venture capitalists-investors with
founders of ArsDigita. This letter I want to explain the current
situation (from the point of view of one of the parties to the defense).
99% of the information below has nothing to do with judicial
process. A lawsuit filed by shareholders of the company is trying to determine the rights and
the degree of control over the management of the company on the basis of legal norms and signed
agreements. In other words, inferences about who the person knows how to
manage the company and were all the decisions made correct going beyond
current process.
In the yard in 1993. At about this time, the basics of the knowledge that
later formed the basis of the ArsDigita Community System (the online construction system
communities). Most people who make money from software development
they did it because they were the first to find a solution
Problems. Attempt to create a company on the bare enthusiasm "our programmers are better
Microsoft and Oracle programmers are doomed to fail — both companies
they have in their arsenals sufficiently high-class specialists capable of
bury any competition. But you can count on success if you
build it on the idea “we will solve this problem several years earlier than
Microsoft and Oracle. ”
A good example that a small company can live and thrive, despite
on the strongest competition from large companies is Adobe. Read
biographies of its founders:
http://www.adobe.com/aboutadobe/pressroom/executivebios/johnwarnock.html and
http://www.adobe.com/aboutadobe/pressroom/executivebios/charlesgeschke.html . You
You’ll see that these two guys who founded Adobe have been working hard for many years (and at Xerox PARC,
both in Evans and Sutherland) over the very subject areas for which
Adobe now offers turnkey solutions.
Adobe’s engineers and founders aren’t smarter than their Microsoft counterparts, they’re just
began to think about graphics and printing earlier than Microsoft.
Fast forward to the year 1998 th. We have contracts with several large ones.
companies (America On-Line, Hewlett-Packard, Levi Strauss, Oracle. We
known as ideological leaders (see Macmillan’s Macmillan article in Database
Backed Web Sites) and as market leaders (our open source software for building
learning communities). In the words of Jack Welch, CEO
GE, working for company # 1 or # 2 is both easier and more fun. Other things being equal, customers
knock on your door, not the other way around.
A year later, in 1999, customers simply pushed through our door. Good example
is Siemens. They had to solve an extremely important task, for which
ArsDigita Community System fit perfectly. Understanding how task and
the solution fit together, the Boston Consulting Group brought them to our
Old Quarter Headquarters on Franklin Street, 603 and two weeks later the contract was
signed by
We grew up. But we were still a small company and tried to avoid direct
confrontation with competitors that were financed much better
us. They built "closed" decisions while we preached
openness We wanted to replay them by creating a global application using
open standards and full access to our code, instead of defeating them
on the pages of Business 2.0 magazine. We laughed at most of the little ones.
companies building closed solutions, we asked, “What is their marketing
strategy? Are we both Microsoft and Oracle, just not market leaders and out of money? So what,
does it help to search for and learn from the best programmers? ”
By March 2000, we had grown to 80 people. I was still General, but
was beginning to worry that I was not able to answer anymore who in the company
worked on each specific task. But we still earn good money.
profit, monthly revenue year on year was $ 20 million in
year. We paid almost $ 1 million in income taxes for the year 1999. Not bad at all
Considering that we started the investment of only $ 10,000.
We never tried to attract venture financing, but our momentum and
profits did it for us. Many of the best East Coast venture capital firms
wanted to invest in us, not least because of the super active
investment climate of the time, they sought to invest in a company
and how and where to make a profit — this can be found out later. Arsdigita
looked much better than most start-ups. Despite our 1000% growth in
year, we had our own reserves in the accounts. Most of our revenue was
constant, and most of our customers were pleased with us and loyal to us.
Usually, large companies do not like to buy corporate-level software from small
developers. The risk of bankruptcy is too high. Using open software
source code, in a sense, neutralizes this risk a bit, but desire and
The tendency to order from IBM, Microsoft or Oracle is strong. We tried our best
demonstrate their financial stability and strength. We bought a Ferrari,
which was provided to anyone who brings 10 friends to the company. In the reality
the car cost us only $ 2,000 a month; the employee to whom she was given
I could use it only on condition that he continued working with us. well and
Ferrari's cost is significantly lower than how much head hunter’s services cost.
in terms of the ten employees hired. The presence of such a car on navay
parking created a sense of extravagance — despite the fact that we were in the office
fairly modest, even economical life. And it could hardly be otherwise if
we paid $ 50-85,000 base, plus an annual premium based on the results
companies and the employee himself, and paid for the work of professional
developers at MIT. We had a couple more tricks similar to
Ferrari. One — oceanfront home in Cape Cod, where the development team is
could leave work. Another — ArsDigita University, free annual
professional training program for software developers. Although it can all
look like unnecessary, causing excesses, but in fact a similar approach
to people constantly reminded of the human attitude and care, gave reasons for
journalists writing about us (and they wrote), while standing no more than our
1999 net income (i.e., almost nothing, provided that our revenue
continued to grow).
At the end of March 2000, we signed financing from two venture funds:
Greylock and General Atlantic. With the arrival of two checks from the funds in our bank
formed a solid amount of $ 38 million. Having this stock, we decided to invest part
into the perspective development of our product and into marketing. Under the heading "development
product ”the idea was that partial financing of development was done
teams involved in client projects. The idea was that if the request
client on one or another functional more or less coincided with the fact that we wanted
add to ACS, then we were ready to significantly reduce the price, thereby giving ourselves
the opportunity to study the problem more thoroughly and write the code so that it
could be used on other projects, thereby improving ACS. Under
marketing rubric was the further expansion of our educational
activities (a kind of "educational marketing"). Well, of course, we need
was working capital. A company earning $ 20 million per year should have a good order.
$ 10 million in the bank, in case any of the clients does not pay, will descend
economic downturn, a large and important project will take longer than
planned, etc. Due to the fact that until that time we grew by 1000% per year,
we never had more than a couple of millions in bills.
Under the terms of venture financing, VI (venture investors,
approx. translator ) bought shares of the company, which gave them about 30%
votes. According to the standard conditions of corporate governance minority
shareholders of this level should have received very little (or no)
strategic control over the company. In this regard, we also had
signed an agreement between shareholders, according to which current shareholders (I and Jin
Choi (Jin Choi)) vote for the board of directors of the company in the following composition:
Those. VI received 2 of 7 seats on the board of directors. Current shareholders will have to
elect the rest. In addition, VIs have received veto power over certain types
significant transactions, n. buying expensive equipment, selling a company,
acquisition of another company. Finally, in the case of the sale of the company, they had
eligible to receive on a priority basis the amount of their investments of $ 38 million (which
Needless to say, when sold for less than $ 38 million, the remaining shareholders
would not get anything). The terms offered to us by three other VI firms were
are equivalent. They wanted a “seat on the council,” but nobody wanted
absolute control over the company. Their proposals boiled down to
help the founders of ArsDigita do what they have already done very well.
In parallel with the venture financing negotiations, we conducted an active search
"External CEO". Now, after I talked to many people
succeeding, I understand that it was a fundamentally bad idea. Even
The most capable person will need a couple of years to understand the culture
the company, its people, the market, objectives and goals. Attracted by the CEO can be
very lucky in a stable 50 year old company in which its bureaucratic
the system itself is also the one in charge (see George W. Bush at the head of the Federal
Government (meaning the current daddy (spring 2008) of the US President,
George Bush Sr., approx. translator )). But in a young company so internal
There is no stability and strength.
Anyway, we hired Allen Shaheen to recommend Chip
Hazard (Chip Hazard), an employee of Greylock, who represented the interests of the company in
our board of directors. Allen’s previous job was Cambridge
Technology Partners (CTP), which was involved in the precompilation of IT services. In her
He managed a large group of consultants in the overseas branch of the company. I knew,
that Allen has no experience in software development and that when working in CTP in his
the tasks included neither the development of a general development strategy of the company, nor the need
extraordinary, innovative approach to solving problems. In other words, he
always worked for someone in a significantly less competitive environment than an area
software development. However, the other candidates we interviewed were either
very poorly prepared (as one of the Lotus company), or were too
aggressive and intrusive and my management team of the time would not have been able
work with them. Allen seemed like a man who could work together with
complex people scattered around different offices of the company, thanks to his experience
management of a multinational business in the provision of IT services. Generally,
We agreed that I will continue to deal with engineering issues
education and propaganda while Allen will do everything
the rest.
A few weeks after Allen’s passage, several people pointed out to me
the fact that I have almost no power left: Allen and two representatives
VI could block any decision on the board of directors. Considering that we are so
did not fill the two invited positions on the council, there were many
the truth. 3 of 5 = absolute power. And the point.
Part two has already been published .
Once there was one very interesting company. It was still in those times when
there were no google campuses, the apple apple was still overflowing with many colors, and the sun and
SGI was still considered a super machine.
At that time, for many geeks and nerds, ArsDigita was about the same beacon,
what is now google. Many have grown up on the book by Philip Greenspun
Philip and Alex 'Guide to Web Publishing and His Short Works
SQL for Web Nerds and Tcl for Web Nerds . For many, the hobby of the photo was the same
inspired by Phil .
ACS (ArsDigita Community System) was the first open implementation platform for
building sites, whether it is CRM, portal, CMS — in general, any application,
community oriented. The choice of architecture for implementation
This platform may seem strange in part (especially for the Russian
reader) —ACS was written in Tcl , and used AOLServer as
web server. However, if you read the articles above, you may
understand why.
')
For those who are interested, ACS still lives mostly like OpenACS , completely
migrated to postgreSQL instead of oracle (although oracle is still
supported). All assets of ArsDigita were bought in 2002 by Red Hat , but on
right now, what was supposed to be Red Hat Contacts and Content Management
System (CCM) no longer exists.
This translation is dedicated to the history of this company, its formation and its death (part
first of three).
***
If you happen to be near the Delaware court in the last few
days, then you may have heard about the lawsuit of venture capitalists-investors with
founders of ArsDigita. This letter I want to explain the current
situation (from the point of view of one of the parties to the defense).
99% of the information below has nothing to do with judicial
process. A lawsuit filed by shareholders of the company is trying to determine the rights and
the degree of control over the management of the company on the basis of legal norms and signed
agreements. In other words, inferences about who the person knows how to
manage the company and were all the decisions made correct going beyond
current process.
Start
In the yard in 1993. At about this time, the basics of the knowledge that
later formed the basis of the ArsDigita Community System (the online construction system
communities). Most people who make money from software development
they did it because they were the first to find a solution
Problems. Attempt to create a company on the bare enthusiasm "our programmers are better
Microsoft and Oracle programmers are doomed to fail — both companies
they have in their arsenals sufficiently high-class specialists capable of
bury any competition. But you can count on success if you
build it on the idea “we will solve this problem several years earlier than
Microsoft and Oracle. ”
A good example that a small company can live and thrive, despite
on the strongest competition from large companies is Adobe. Read
biographies of its founders:
http://www.adobe.com/aboutadobe/pressroom/executivebios/johnwarnock.html and
http://www.adobe.com/aboutadobe/pressroom/executivebios/charlesgeschke.html . You
You’ll see that these two guys who founded Adobe have been working hard for many years (and at Xerox PARC,
both in Evans and Sutherland) over the very subject areas for which
Adobe now offers turnkey solutions.
Adobe’s engineers and founders aren’t smarter than their Microsoft counterparts, they’re just
began to think about graphics and printing earlier than Microsoft.
Fast forward to the year 1998 th. We have contracts with several large ones.
companies (America On-Line, Hewlett-Packard, Levi Strauss, Oracle. We
known as ideological leaders (see Macmillan’s Macmillan article in Database
Backed Web Sites) and as market leaders (our open source software for building
learning communities). In the words of Jack Welch, CEO
GE, working for company # 1 or # 2 is both easier and more fun. Other things being equal, customers
knock on your door, not the other way around.
A year later, in 1999, customers simply pushed through our door. Good example
is Siemens. They had to solve an extremely important task, for which
ArsDigita Community System fit perfectly. Understanding how task and
the solution fit together, the Boston Consulting Group brought them to our
Old Quarter Headquarters on Franklin Street, 603 and two weeks later the contract was
signed by
We grew up. But we were still a small company and tried to avoid direct
confrontation with competitors that were financed much better
us. They built "closed" decisions while we preached
openness We wanted to replay them by creating a global application using
open standards and full access to our code, instead of defeating them
on the pages of Business 2.0 magazine. We laughed at most of the little ones.
companies building closed solutions, we asked, “What is their marketing
strategy? Are we both Microsoft and Oracle, just not market leaders and out of money? So what,
does it help to search for and learn from the best programmers? ”
By March 2000, we had grown to 80 people. I was still General, but
was beginning to worry that I was not able to answer anymore who in the company
worked on each specific task. But we still earn good money.
profit, monthly revenue year on year was $ 20 million in
year. We paid almost $ 1 million in income taxes for the year 1999. Not bad at all
Considering that we started the investment of only $ 10,000.
We never tried to attract venture financing, but our momentum and
profits did it for us. Many of the best East Coast venture capital firms
wanted to invest in us, not least because of the super active
investment climate of the time, they sought to invest in a company
and how and where to make a profit — this can be found out later. Arsdigita
looked much better than most start-ups. Despite our 1000% growth in
year, we had our own reserves in the accounts. Most of our revenue was
constant, and most of our customers were pleased with us and loyal to us.
Usually, large companies do not like to buy corporate-level software from small
developers. The risk of bankruptcy is too high. Using open software
source code, in a sense, neutralizes this risk a bit, but desire and
The tendency to order from IBM, Microsoft or Oracle is strong. We tried our best
demonstrate their financial stability and strength. We bought a Ferrari,
which was provided to anyone who brings 10 friends to the company. In the reality
the car cost us only $ 2,000 a month; the employee to whom she was given
I could use it only on condition that he continued working with us. well and
Ferrari's cost is significantly lower than how much head hunter’s services cost.
in terms of the ten employees hired. The presence of such a car on navay
parking created a sense of extravagance — despite the fact that we were in the office
fairly modest, even economical life. And it could hardly be otherwise if
we paid $ 50-85,000 base, plus an annual premium based on the results
companies and the employee himself, and paid for the work of professional
developers at MIT. We had a couple more tricks similar to
Ferrari. One — oceanfront home in Cape Cod, where the development team is
could leave work. Another — ArsDigita University, free annual
professional training program for software developers. Although it can all
look like unnecessary, causing excesses, but in fact a similar approach
to people constantly reminded of the human attitude and care, gave reasons for
journalists writing about us (and they wrote), while standing no more than our
1999 net income (i.e., almost nothing, provided that our revenue
continued to grow).
At the end of March 2000, we signed financing from two venture funds:
Greylock and General Atlantic. With the arrival of two checks from the funds in our bank
formed a solid amount of $ 38 million. Having this stock, we decided to invest part
into the perspective development of our product and into marketing. Under the heading "development
product ”the idea was that partial financing of development was done
teams involved in client projects. The idea was that if the request
client on one or another functional more or less coincided with the fact that we wanted
add to ACS, then we were ready to significantly reduce the price, thereby giving ourselves
the opportunity to study the problem more thoroughly and write the code so that it
could be used on other projects, thereby improving ACS. Under
marketing rubric was the further expansion of our educational
activities (a kind of "educational marketing"). Well, of course, we need
was working capital. A company earning $ 20 million per year should have a good order.
$ 10 million in the bank, in case any of the clients does not pay, will descend
economic downturn, a large and important project will take longer than
planned, etc. Due to the fact that until that time we grew by 1000% per year,
we never had more than a couple of millions in bills.
Under the terms of venture financing, VI (venture investors,
approx. translator ) bought shares of the company, which gave them about 30%
votes. According to the standard conditions of corporate governance minority
shareholders of this level should have received very little (or no)
strategic control over the company. In this regard, we also had
signed an agreement between shareholders, according to which current shareholders (I and Jin
Choi (Jin Choi)) vote for the board of directors of the company in the following composition:
- 1 representative from Greylock
- 1 representative from General Atlantic
- 3 senior managers from ArsDigita, including the CEO
- 2 invitees
Those. VI received 2 of 7 seats on the board of directors. Current shareholders will have to
elect the rest. In addition, VIs have received veto power over certain types
significant transactions, n. buying expensive equipment, selling a company,
acquisition of another company. Finally, in the case of the sale of the company, they had
eligible to receive on a priority basis the amount of their investments of $ 38 million (which
Needless to say, when sold for less than $ 38 million, the remaining shareholders
would not get anything). The terms offered to us by three other VI firms were
are equivalent. They wanted a “seat on the council,” but nobody wanted
absolute control over the company. Their proposals boiled down to
help the founders of ArsDigita do what they have already done very well.
In parallel with the venture financing negotiations, we conducted an active search
"External CEO". Now, after I talked to many people
succeeding, I understand that it was a fundamentally bad idea. Even
The most capable person will need a couple of years to understand the culture
the company, its people, the market, objectives and goals. Attracted by the CEO can be
very lucky in a stable 50 year old company in which its bureaucratic
the system itself is also the one in charge (see George W. Bush at the head of the Federal
Government (meaning the current daddy (spring 2008) of the US President,
George Bush Sr., approx. translator )). But in a young company so internal
There is no stability and strength.
Anyway, we hired Allen Shaheen to recommend Chip
Hazard (Chip Hazard), an employee of Greylock, who represented the interests of the company in
our board of directors. Allen’s previous job was Cambridge
Technology Partners (CTP), which was involved in the precompilation of IT services. In her
He managed a large group of consultants in the overseas branch of the company. I knew,
that Allen has no experience in software development and that when working in CTP in his
the tasks included neither the development of a general development strategy of the company, nor the need
extraordinary, innovative approach to solving problems. In other words, he
always worked for someone in a significantly less competitive environment than an area
software development. However, the other candidates we interviewed were either
very poorly prepared (as one of the Lotus company), or were too
aggressive and intrusive and my management team of the time would not have been able
work with them. Allen seemed like a man who could work together with
complex people scattered around different offices of the company, thanks to his experience
management of a multinational business in the provision of IT services. Generally,
We agreed that I will continue to deal with engineering issues
education and propaganda while Allen will do everything
the rest.
A few weeks after Allen’s passage, several people pointed out to me
the fact that I have almost no power left: Allen and two representatives
VI could block any decision on the board of directors. Considering that we are so
did not fill the two invited positions on the council, there were many
the truth. 3 of 5 = absolute power. And the point.
Part two has already been published .
Source: https://habr.com/ru/post/31517/
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