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| 5/24 |
| 2005/5/23-25 [Computer/SW/Database, Computer/SW/OS/Windows] UID:37802 Activity:low |
5/23 There used to be a company called Arts(sp?) Digita or something like
that. Anyone knows what happened to it? Thx.
\_ Ars Digita
\_ http://www.assureconsulting.com/articles/arsdigita.shtml
\_ I like this part: "We bought a Ferrari to give away to any
employee who recruited 10 friends. In reality the car only cost
$2,000 per month, the person who won it only got to drive it for
as long as he or she was employed, and the cost of a Ferrari is
much lower than 10 headhunter commissions."
\_ commissions were what, $25k each back then? still
probably around that number today. 10*25=250k
\_ http://csua.com/?entry=23835
\_ i used to work there ... they got bought by red hat. pretty much
everyone got laid off at some pt or another except for i think
1 guy who went to red hat w/ the technology purchase (also a
berkeley grad). many of the berkeley people now work at another
berkeley consulting company that uses some of the open source
software. I dont know what happened to the boston employess. |
| 5/24 |
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| www.assureconsulting.com/articles/arsdigita.shtml f you've been hanging out around courthouses in Delaware lately, you may have heard about some legal acrimony involving ArsDigita's ventu re capitalists versus the ArsDigita co-founders. This letter explains ho w it came about (from the perspective of one of the defendants). Note that 99 percent of the information in this document is irrelevant to the lawsuit. The lawsuit has to do with the rights of the shareholders to control management based on some technical points of law and contract . In other words, the questions of who is best qualified to run the comp any and whether business decisions have been correct are largely irrelev ant. That's when we started developing the domain knowl edge that led to the ArsDigita Community System product. Most people who 've made money in the software business are those who wrapped their mind s around a problem earlier than others. You can't base a business on "we 'll be better programmers than the folks at Microsoft and Oracle"; each company has enough computer science PhDs and expert software engineers t o bury 100 competitors. You can, however, base a business on "we'll atta ck this problem a few years before Microsoft and Oracle notice it and re cognize it as a problem." Adobe is a good example of a small software company that has thrived desp ite possible competition from much larger companies. html You can see that these two guys, who have managed Adobe since its inception , spent a lot of time at Xerox PARC and Evans and Sutherland grappling w ith substantially the same kinds of problems for which Adobe provides so lutions. Adobe's engineers and founders aren't smarter than Microsoft's; they mere ly started thinking about graphics and publishing before the Microsoft f olks did. We have contracts with a few big companies: AOL, HP , Levi Strauss, Oracle. We are recognized as thought leaders (publicatio n by Macmillan of Database Backed Web Sites) and market leaders (our ope n source software for online learning communities). As GE's Jack Welch w ill tell you, it is a lot easier and more fun working for a company that is #1 or #2 in its market. They had a critical business problem that could be solved by the ArsDigi ta Community System. Recognizing the goodness of fit between our product and Siemens's problem, Boston Consulting Group brought them to our old HQ (603 Franklin) and within two weeks we had a contract. We were still small, though, and we avoided direct confronta tions with heavily financed competitors. We'd undermine them by creating a world-wide open-source standard rather than try to outshout them with full-page ads in Business 20 We laughed at most of the small closed-source companies, asking "W hat's their marketing slogan? We're just like Microsoft and Oracle but w ithout the market leadership and profits? I was still CEO and beginning to feel nervous that, for every task in the company, I could not say exact ly who was supposed to do what and by when. But we were profitable, with monthly service contract revenue coming in at a $20 million/year rate. We'd paid nearly $1 million in income tax on our profits for calendar ye ar 1999. Not so bad considering that we built everything from a $10,000 investment. We'd never sought venture capital but our revenue and profits were bringi ng some of the top East Coast firms to our door. Most of the time these guys were being forced by the frenzied times into investment in a compan y and figuring out how to get revenues later (and profits much much late r). ArsDigita looked a lot better than than the typical "wing and a pray er" bunch of guys with a fancy spreadsheet. Companies don't like to rely on enterprise software from small companies. There is too much risk that the vendor will go bankrupt. Open source am eliorates this risk to some extent but the tendency to stick to IBM, Mic rosoft, and Oracle is strong. We tried to present a face of financial in vincibility to the world. We bought a Ferrari to give away to any employ ee who recruited 10 friends. In reality the car only cost $2,000 per mon th, the person who won it only got to drive it for as long as he or she was employed, and the cost of a Ferrari is much lower than 10 headhunter commissions. But sitting in the parking lot it gave us the appearance o f extravagance while inside the building we were living the frugal life- -in a world starved for software development talent, it would have been hard to lose money paying MIT-educated programmers $50-85,000 base salar ies plus an end-of-year bonus based on accomplishment and the firm's per formance. We had a couple of other Ferrari-like schemes up our sleeves. One was a beach house on Cape Cod where teams of programmers would go to work and write. Another was ArsDigita University, a tuition-free post-b accalaureate one-year computer science program. These things sounded out rageous, gave people a way to remember who we were, gave journalists a r eason to write about us (and they did), all while costing no more in tot al than our 1999 profit (ie, practically nothing if our revenue had co ntinued to grow). At the end of March 2000 we closed a venture capital financing with Greyl ock and General Atlantic. By the time a couple of small checks arrived w e had an extra $38 million to put in the bank. We figured that we could use the extra money to place some bets on product development and market ing. Under the product development rubric we thought we'd not make the c lient teams carry the full weight of ACS development on their shoulders. If they found a client whose needs were similar to what we wanted in th e product, we'd do the job for a low-ish price to get experience with th at problem (see the "domain knowledge" sentence above) and develop reusa ble code to enhance ACS. Under the marketing rubric we'd expand our "edu cation marketing" program. A company with $20 million in revenue really needs to have about $10 million in t he bank in case a customer doesn't pay, the economy turns soft, an impor tant project is late, etc. Because we'd been growing 1000 percent per ye ar we never had more than a couple of million dollars in the bank. The terms of the venture capital investment were that the VCs purchased s tock that gave them about 30% of the issued shares. Under standard corpo rate governance, a minority ownership interest such as this would give t he VCs little or no control over the direction of the company. So we als o had a stockholder's agreement that required the existing shareholders (myself and Jin Choi) to vote for a board of directors that consisted of 1 Greylock person 1 General Atlantic person 3 senior officers from ArsDigita, including the CEO 2 outsiders So the VCs would have 2 out of 7 board seats. Plus the VCs got veto power over certain kinds of big transa ctions, such as the buying of expensive capital equipment, the selling o f the company, the acquiring of another company. Finally in the event th at the company was sold, they were entitled to the first $38 million off the top of the deal (note that this makes all of the common shares theo retically worthless in the event of a sale for less than $38 million). T he terms we'd been offered from the three other serious venture capitali st bidders were similar. They wanted "a seat at the table" but nobody wa s asking for absolute power over the company going forward; the firms pr oposed to help ArsDigita's founders do what we'd been doing successful a lready. In parallel to all of this VC stuff we'd been trying to recruit an "outsi de CEO". Based on my conversations with successful business people aroun d the world, I now believe this is a fundamentally bad idea. Even the mo st able person will need a few years to learn about a company's market, challenge, mission, culture, and people. A fresh-from-the-outside CEO mi ght be successful at a 50-year-old company with a huge bureaucracy that manages itself (cf. But young enterprises don't have that kind of inherent stability. Anyway, as it happens we recruited Allen Shaheen on the recommendation of Chip Hazard, a Greylock employee who would ultimately represent the fir m on our Board. Allen came from Cambridge Technolog... |
| csua.com/?entry=23835 Just in case you are wondering what all those drones in Haas are trained to do. And do you really think Eve would be a VP if she wasn't sleeping with him? in fact, she was sleeping with that guy Aure that she mentions in the article.... which could have in some way contributed to the fact that he was the first of the old-school VP's to go. Here's a juicy morsel: There is a Yahoo group called ex-aD of former employees. While this is mostly disgruntled programmer and admins, some former managment also sub- scribes. Recently, the ever-charming philg himself posted a message announcing that he just bought a new cessna-type plane with the $7M he got from the lawsuit, and is now planning to fly to alaska, and asking if anyone would like to come with him. com/arsdigita-history Eve Andersson, February 2002 This is a story about a company. A company t hat built products that were useful to many other companies. A company t hat had ethics, that treated the breadwinners (programmers) with respect , a company that could afford to help people and give away software and training, while still having enough left over to grow and save a few $mi llion in the bank. That is, until the venture capitalists arrived on the scene. Greed replaced philanthropy as each of the company's unique prog rams was dropped. But, this is a company, and the goal is to make money -- any positive impact on the world is secondary, right? The technical a nd managerial incompetence of the VCs and those they hired drove the com pany into the ground. All but 10 of the 240 employees were fired, laid o ff, or quit. All of the $40+ million in venture capital was squandered. The monthly operating profit turned to loss as more talentless executive s were hired who threw out the company's old, useful products and put th eir blind faith in engineers who spent millions building complicated sof tware that solved no business problems. This is a story that will teach you something about building a software product, about profitably runnin g a company, and about what can happen if unqualified organizations obta in control. The Birth of ArsDigita Since the early days of the Web, I ha d been building web sites for big-name clients in California with my fri end Aurelius Prochazka. Meanwhile, Philip Greenspun and two of his frien ds, Jin Choi and Tracy Adams, were doing similar work out in Massachuset ts. When I moved to Massachusetts in 1998, we joined forces and were qui ckly able to quickly attract high profile clients, such as Levi Strauss, Environmental Defense, and MIT Press. Our band of programmers, called A rsDigita ("Digital Arts"), was profitable from the beginning. But we did have a few thousand dollars' worth of computer equipment and our five m otivated selves. The Birth of the ACS It didn't take long for us to real ize that we were solving some of the same problems over and over again f or each of our sites. It doesn't matter if a site sells custom-made slac ks, lets people share their photography knowledge with other enthusiasts , helps people fight environmental battles against companies polluting t heir groundwater, facilitates the trading of financial instruments, or h elps people find the best combination of red, white, and sparkling wines for their next soire. We distributed the ACS free and open-source, not merely to be altruistic, but because it made sound business sense. If yo u are doing professional services, the best way to get your name out, ha ve more clients find you (yes, free marketing), and improve the code bas e is to share it with the open-source world. The ACS began as a small co re of functionality, but more opportunities for code reuse quickly arose . Polls and portals and intranets and calendars and address books were r epeatedly requested. It would have been foolish to build this functional ity one-off for each client. It would have been a wasted opportunity to build this only for ourselves and not let our work reap the benefits of an open-source release. Hence we began the release of ACS modules that c ould run on top of the core. Dozens of useful modules were created, and that is what led to the adoption of the ACS by programmers and companies world-wide. At first it was difficult to hire people because developers don't feel safe working for a company with no office or regularly-sched uled payroll. It didn't cost us much to rent a lovely old house in Harva rd Square (complete with showers and kitchen, both which were well-appre ciated after nights of obsessive coding). In January, we began a payroll system so that people's paychecks would no longer be tied to when our c lients paid the invoices. Even if people were earning a bit less than be fore the structure was imposed, they were happy with the change. By Janu ary 1, 2000, we were up to 57, almost all of whom were developers. Aroun d this time, we started looking in earnest for venture capital in order to accelerate growth and to allow ourselves the luxury of taking develop ers off of paying client projects so they could work full-time on our co re product, the ArsDigita Community System (ACS). By the end of March 20 00, we had 110 employees (almost double what we had 3 months previously) , 7 offices, healthy profits, plenty of cash in the bank, and $20 millio n in annual revenue, with the revenue figures still on an upward trend. Company culture The amazing thing is that greed and ruthlessness were cl early not necessary for us to rake in the cash. ArsDigita managed to mak e a large profit giving away free software and training. During the grow th, we never gave up on our fundamental priciples. These principles that we lived by made the company a fun place to work where the opportunitie s for learning were enormous. It's easy to sleep at night when you know you are doing good things for your clients and for the world. And when t he good things you're doing are also contributing the bottom line, direc tly or indirectly, you know you've got a winning company. This builds st ronger client relationships in the long-run. We were completely open on our web site about our strengths, weaknesses, capabilities, our product features. We gave away all our knowledge about building collaborative we b sites in Philip & Alex's Guide to Web Publishing. Even the company str ucture and salary structure were online. If companies think you can deli ver something that you can't, either you're wasting everyone's time in t he sales cycle or, if you get the contract, you're likely to disappoint the customer. One category of respect is the shallow "don't say anything negative about anyone else's ideas" type, which has been utilized above all else at the post-VC ArsDigita. But there's also a much deeper type of respect, where people's contributions are recognized and rewarded and there are no obstacles to advancement for capable and motivated people, regardless of their background. The latter type of respect was one of A rsDigita's foundations. We packaged up all of our reusable, non-client-s pecific software and distributed the source code and documentation free of charge. The business benefits of open source are numerous enough to f ill a large essay, but in brief, open source attracts and motivates empl oyees (most good developers get a thrill out of having other developers use their code world-wide), makes sales easier (it's less risky for a po tential client to base their business on your software), results in high er-quality code, enables contributions from the community, and establish es your software as a kind of world-wide standard. We also TA'd boot cam ps, 1-3 week intensive training courses for developers who wanted to be able to extend our software, and could teach at the pioneering ArsDigita University, a one-year program that taught brilliant non-computer-scien tists all the computer science course material in a typical MIT or Stanf ord computer science undergraduate education. Employees were encouraged to submit articles to the ArsDigita Systems Journal as well. Besides bei ng an educational and satisfying experience for ArsDigita employees, it also benefits the core business by introducing ArsDigita's software... |