Originally backed by Benchmark Capital and Pequot Ventures, Cohesiant scored another hit when it secured Gary Oliver as it's CEO in May of 2002. The UCLA alumnus had built his early career at IBM before leaving technology sales and joining the other side, as Senior Vice President of IT at Visa. He later returned to the enterprise software world as head of Remedy's IT Service Management business before accepting a General Manager role with Peregrine Systems. As readers will no doubt remember, by May of 2002 the talent flood gates had completely reversed: executives that were once desperate to trade big company life for dotcom jobs were now terrified of startup scenarios. Yet something possessed Gary Oliver to take the plunge; Sterling-Hoffman's Managing Director Angel Mehta tried to find out what.
Sterling-Hoffman: Where did the idea for Cohesiant come from? Describe the offering and why it's compelling to IT buyers when most projects for enterprise software are being shelved.
Gary Oliver: The genesis of Cohesiant started with the idea of being able to understand and capture the interaction between users and the applications they use, both on the desktop and server. As the company progressed, this evolved into the goal of providing IT management complete visibility into the inventory and utilization of all IT hardware and software resources across the organization.
The response to the company has been tremendous because most large IT organizations have a mandate to reduce costs, eliminate or consolidate underutilized hardware and software, and to make sure new IT investments are meeting objectives. These IT organizations need much greater visibility to make these decisions. Our solution provides exactly the information they need.
Sterling-Hoffman: How did you get involved with the company?
Gary Oliver: I was head of the IT Service Management business at Remedy, and then after Remedy was acquired by Peregrine, head of the Infrastructure Management business. In these roles, I was responsible for delivering solutions to automate service and asset management processes within large organizations. While these solutions were highly successful in the service management area, I realized there was still a significant need to provide IT execs with the information to make better decisions about IT resources. When I heard the Cohesiant story and met the team, I was sold.
Sterling-Hoffman: I noticed you went from sales & marketing at IBM to a role at VISA where you were a senior IT executive? That's not a common move. How did it come to be in your case?
Gary Oliver: You're right, it was not a traditional move. I followed a colleague who went to Visa and convinced me to try something new and challenging. I had the chance to experience the challenges of today's CIO. I'm really glad I did. It was a fun and challenging four years.
Sterling-Hoffman: How much of a factor was your 'IT' related stint in the board selecting you as CEO?
Gary Oliver: You would have to ask them, but I am certainly fortunate to have experience both as an IT exec as well as a provider of solutions to IT organizations. It provides a perspective that would be difficult to have without having been in both roles. I treasure customer interaction, as I can relate to their challenges and opportunities, and can also help translate their needs into future Cohesiant strategy and solutions.
Sterling-Hoffman: Cohesiant looks like the earliest stage company you have ever joined. What made you take that risk?
Gary Oliver: The early vision of the company just made perfect sense to me, and when I met the investors and the team I was completely convinced.
When I was in the IT role, we had tons of information related to the operations of systems and networks, but we had very little information related to the actual use of these systems, or the value that they were providing. For example, how do you optimize applications or servers if you don't know what role the servers are providing, what applications are running on them, or who is actually using or not using those applications? Many large organizations still take physical inventories of desktops and servers, which is expensive and barely scratches the surface of the problem. Cohesiant can automate the entire process, from inventory to resource utilization. This includes hardware, packaged apps, and custom applications. I don't know of a large company that would not gain significant benefit from this visibility.
Sterling-Hoffman: What does the competitive landscape look like for Cohesiant? What are the biggest threats?
Gary Oliver: We just need to continue to execute to our plan. The economy is certainly tougher than we would like, but we have a value proposition that resonates with large organizations, especially in a tough economy. Budgets are tight, so organizations are focused on eliminating waste and optimizing the resources they have. Given that budgets for new IT initiatives have been trimmed or cut completely, cost savings from ongoing operations can be reallocated or dropped to the bottom line. We can help find the savings and help optimize current resources.
Today, we are the only company completely focused on this. I'm sure that will not be the case forever, but we believe we have a great jump start, and the right game plan to stay ahead. It is all about execution.
Sterling-Hoffman: Cohesiant managed to attract financing from top tier investors in one of the worst markets ever. How and why do you think that happened?
Gary Oliver: The opportunity, the vision, and the team. Benchmark and Pequot saw the opportunity to build a great company around providing IT executives with the visibility to make better decisions about IT resources. They have been great partners, and continue to be very supportive of the team.
Sterling-Hoffman: What have the surprises been since taking the CEO role at Cohesiant? What did you NOT expect, coming over from Peregrine?
Gary Oliver: The IT community is under more time and financial pressures than I have ever seen. In some ways, this really plays to our strengths because of our value proposition of helping reduce costs in a very short period of time. At the same time, these organizations are many times just trying to keep above water given reductions in staff and the need to maintain service levels. Time is a very scare resource in today's IT organizations, but once we have the chance to tell the Cohesiant story, things move quickly.
Sterling-Hoffman: How much of a role does your board play in arranging introductions to CIO's? Have you found it possible to get on a CIO's radar WITHOUT a personal introduction? Does this imply that a 'rolodex' is critical when hiring a VP Sales?
Gary Oliver: Our board is very active on our behalf and that helps immensely. We'll take all the intros we can get. On the question of getting appointments with CIO's, we have a real advantage because most of them have sponsored initiatives around cost take out, license rationalization, or server consolidation.
All else being equal, hire the sales leader with a great rolodex, but don't trade a rolodex for leadership and a great track record. If the company has a compelling value proposition, a great sales leader will get the appointments.
Sterling-Hoffman: You're the first CEO we're featuring in 2003. How about a read on what lies ahead for software startups. Will IT buyers start spending money again?
Gary Oliver: I think it is a great time to be at a technology start up, assuming the company has a straight forward and "must have" value proposition, intense focus on the customer, and the discipline to manage cash burn within realistic growth expectations. Access to talent is plentiful, and commercial real estate costs can't get much lower. It is a great time to fly under the radar, while the big public companies are just trying to make conservative earnings estimates.
For many IT organizations, the last time they invested heavily in technology was to prepare for Y2K. Much of this technology clearly needs to be refreshed, but before they start spending, most organizations are trying to rationalize and optimize current applications and resources. For example, while many firms have experienced downsizing, they may still be paying maintenance or lease costs for hardware and software that is no longer being used. Some of the applications that supported these downsized business units could be reduced or eliminated. Many organizations have hundreds if not thousands of servers that need to be rationalized and potentially consolidated.
Last year, many IT organizations actually came in well under budget to help contribute to the bottom line of the business or because they had not yet rationalized the current portfolio of IT hardware and apps. Once these processes are in place, IT spending should start to increase at a modest rate.
Angel Mehta is a Managing Director at Sterling-Hoffman, a retained executive search firm that represents venture capital firms and enterprise software companies in VP Sales, VP Marketing, and C-Level recruitment projects. He can be reached via email at: amehta@sterlinghoffman.net. For more information about Cohesiant or Gary Oliver, contact Lerry Wilson: lwilson@cohesiant.com.