Borland: A big lesson

Nestled in the redwood trees of Northern California's Santa Cruz Mountains is one of the most beautiful office facilities you'll ever see. The impeccably landscaped grounds include ponds, tennis courts, a swimming pool, an auditorium, a fitness center, a large outdoor eating area, and loads of light throughout the open-style architecture.

The facility even has its own exit-entrance ramp off the northbound side of highway 17.

Enterprise Technology Centre (former Borland headquarters)

(Credit: loopnet.com)

Philippe Kahn, the French-born CEO of Borland International, spent nearly $120 million of capital to build the Scotts Valley campus for Borland's 1,200 employees. When the new corporate headquarters opened in 1993, it was full to capacity. It was all downhill from there, but I don't think Kahn knew it at the time.

You see, in September of 1991, Kahn acquired Ashton-Tate for $440 million. To say the merger would prove to be the biggest mistake of his career would be a gross understatement. It was disastrous, as both company's product lines stalled and Ashton-Tate's dBASE database management program completely missed the transition to Windows.

Borland sold Quattro Pro to Novell in 1994

Kahn was ousted by Borland's board of directors in 1995. The company was worth one-fifteenth of its pre-merger valuation of $7 billion. Today, Borland Software has a paltry market value of $91 million.

Borland was one of many companies that took on the Microsoft juggernaut and failed, including Digital Research, Novell, and WordPerfect, to name a few. Was failure inevitable? Not necessarily. Lotus Development survived by refocusing on workgroup computing. The company was later bought by IBM for $3.5 billion and lives on to this day as part of the world's second largest software company.

Today, the Scotts Valley facility is home to a number of companies, including a significant number of Borland's employees, although the company is now headquartered in Austin, Texas. But the beautiful campus represents so much more. It's a monument to one of the most notable examples of how fleeting corporate success can be.

Don't get me wrong, Kahn is a great entrepreneur who went on to found two other successful companies, Starfish Software and LightSurf Technologies. He even claims to have created the camera phone, although, according to this story, that may not be completely accurate.

In any case, according to a 1995 interview, he viewed the Ashton-Tate merger as "a big lesson."

So what's the lesson? A big merger or acquisition is probably the riskiest bet a CEO can make. I wouldn't be surprised if, to this day, as he drives by the Scotts Valley campus, Philippe Kahn still winces at the memory.

[Renegade Knight]

I think it's backwards. Borland while smaller survived market reality and it's own mistakes. It's a stand alone company. Meanwhile Lotus is now just a brand name within IBM. Don't get me wrong, I still have the / menu system memorized and still like the products. I'd just not call them a success since they don't stand on their own.

[jerkanat]

Hey Steve - Small world...I don?t know if you remember me, but I was part of the Hoffman PR Agency team for Tessera years ago when you were here.

Judy Erkanat [e-mail]