Endeca was acquired by Oracle in 2011 for $1.1 billion. In the below presentation, Endeca Founder Steve Papa discusses his path to securing the funding that helped make the company a success. Steve also shares key lessons learned, such as the significance of macroeconomics and how fundraising efforts start long before you are actually pitching to investors.

1. Sept. 2006

3. Oct 2011

5. May 1999

6. Wind in the sails…..
HBS
graduationEndeca
founded

7. Phase 1: 5/99-11/00 – Getting 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

8. Catching a falling knife….
Series A
Series B
Angel

9. Phase 2: 2001 – Getting 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
 Who wants to be customer #2 of a venture backed company,
customer #1 signed July 2000, cash runs out in Oct?
 Willing to solve any problem a customer threw at us
– Technology “platform” vision, interest but no comitment
 Built a leadership team with deep experience

10. Events and a decision…..
 Speaking to every firm out there
 As of Aug 1, cash until mid-Oct
 As of Aug 15, finally a term sheet from a bottom feeder
 As of Aug 21, insider term sheet to close Sept 7 ….much better
 As of Sep 1, outsider term sheet to close Sept 14…..even better
 How to decide?

11. Lessons
 Macroeconomics matter more than almost anything else
 Fundraising starts long before you are pitching to investors
 Get ANY term sheet and never stop looking for options until a
round is done
 It is a multi-play game…relationships matter for the long term
 Choose who you go into business with carefully – ethics,
commitment, someone that is there for you when you need them
 Luck is not optional
 Once you agree on a deal….get it done before the world changes

12. Phase 3: From first 5 customers 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”

13. 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

14. Ecommerce + big ($) problems nobody else could solve

15. November 3rd
2006

16. 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

17. Governor Patrick, July 2011

18. Phase 6: Exit – IPO or M&A?
 August 2011….
– AAA US Treasuries?
– Europe?
 Time
 Running a public company
 Hiring bankers

19. The Platform Lives On!

20. 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

21. 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

22. 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?

23. Luck plays a bigger role than most will admit
But…
Luck favors the prepared
Work hard, do things you love to do, have fun
and with some luck….you’ll become an
“overnight success”

24. Enterprise Software 2012
 2000-present….consolidation era
– Big enterprise sw reps….going away
 Hard to sell big ticket to IT without account ownership
– Partners hard to come by
 low cost, low visibility account entry
 SAAS apps
– Under the radar account entry
– Selling to the business

25. Big Data
 Real but overhyped
 Apps play versus infrastructure play
– Infrastructure too complex for all but a few organizations
– Moore’s law + open source + too much competition makes the
infrastructure play a challenge
– Only a few very large like Facebook - Teradata as an example
 Fundamentally new opportunities in apps

26. What can a venture partner bring?
 Credibility
 Talent
 Support while figuring it out
 Support while friends are destroying the economy
 Coaching
 Parties with peers

27. Human Capital Sources and Implications
 Academic
 Smart intellectually curious overachiever
 Experienced
 Skilled
 Combinations of the above
 What makes a company builder?
 What makes an entrepreneur?
– Don’t make it too easy….lesson learned, won’t be appreciated