Anatomy Of A Startup

How top technology exec ken coleman developed a novel software product and used his business network to launch a revolutionary enterprise in silicon valley

information technology function into a massively complex business comprising hundreds of employees, thousands of vendors, and multimillion dollar budgets.

Coleman consulted with Steve O’Connor, the former chief information officer at SGI. Both men recognized inefficiencies with the information technology process: Managers have difficulty making quick decisions because they have to manually review reams of complex spreadsheets. Ironically, while information technology uses integrated business applications for customer relationship management, chief information officers still use rudimentary management tools.

Coleman smelled opportunity. He thought about developing integrated business management applications for chief information officers and information technology organizations so they could better manage costs, identify redundancies in various departments, and develop strategic partnerships within a given company. Coleman believed his groundbreaking software product could work. And by enlisting O’Connor, former SGI employees, and other tech veterans, he had a team that could build a rock-solid organization and execute his business strategy. But in a business environment marked by a weakened tech sector, economic uncertainty, and the fallout from corporate scandals such as Enron and WorldCom, some may argue there couldn’t have been a worse time to launch such a venture. But Cole maintains, “A downturn is a good time to start a new company. Expectations are lower, you can find good people, and rents are cheaper.”

Besides, Coleman was inspired to prove that he could develop a tech company that was devoid of the dot-com hype: e-companies with flawed business models and inflated valuations. He asserts: “I wanted to demonstrate that I could start a company the old-fashioned way–a real company rather than a financially engineered one.”

The Capital Chase
The newly minted entrepreneur still had to find a way to fund ITM. Common wisdom suggests that he could receive funding because he’s, well, Ken Coleman. According to Fred Gibbons, a member of the ITM advisory committee and a startup coach who boasts the founders of Yahoo! and Google as former protégés: “Ken is very fundable because of what he knows and who he knows.”

Over the years, Gibbons maintains that Coleman had been his “consigliere,” guiding him in the startup of his own firm, Software Publishing Co., and its eventual sale. When Coleman and O’Connor approached Gibbons with their plan for ITM, Gibbons treated them like any other budding entrepreneurs. “When people come to me with ideas, the first hurdle I want to see them get over is [whether] they know what they’re talking about. So in the case of Ken, the answer was easy, and Steve was an information technology manager. So I said, ‘OK these guys know the customer, they know the problem they’re trying to solve.’ Then I wanted to have some sense of whether they were late to the party. Had the problem already been solved? Were they climbing a hill, were there a lot of giants waiting to crush them?” After the grilling, he “had a sense that there was a clear opportunity there.”

But not every venture capitalist in the Valley wanted to bite. Some maintained that Coleman’s idea sounded too big

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