So awful, in fact, that the company Liautaud helms, Business Objects, saw its stock price plummet from $50 to $5 as sales dried up. To make matters worse, a tricky product transition had gone terribly wrong, and customers voted with their wallets. All in all, it didn't bode well.
These days the naysayers are long gone, and Wall Street has turned into Business Objects' amen corner. Recent financial results tell the story: In its last quarter, the company more than doubled earnings, and it increased guidance for the current quarter. The company is now on track to surpass the $1 billion mark for annual revenue.
Liautaud co-founded Business Objects in 1990. Four years later he took the company public on the Nasdaq, where it became the first French software maker listed in the United States.
The company's niche is business intelligence, a segment of the software market that receives relatively little notice compared with the attention lavished on the Microsofts, Googles and Oracles of the industry. But with IT budgets remaining under lock and key, analysts say this is one area that can still command serious attention from purchasing agents. Why? Because companies like Business Objects can say they have a way help a business make better decisions--with the applications the business already bought and installed.
On the eve of Business Objects' 15th anniversary, Liautaud spoke with CNET News.com about changes in the software business and his status as one of the few French entrepreneurs to make it big in Silicon Valley.
Q: You're coming up on the 15-year anniversary of the company in a business that's had its share of ups and downs. Were there times along the way when you thought you weren't going to make it?
Liautaud: There were definitely those times. In 1996, we went through an architectural change and completely rewrote our entire product suite. It was a tough transition. We made the move to a new Windows platform and came up with a great product--but none of the customers were ready. Sales went down and the stock went from $50 to $5. A number of people then said Business Objects was not relevant. But we focused on what the issues were. We changed our software development, moved our center of gravity from Paris to California, and re-established relationships with many partners here--and things improved significantly.
You're one of the few French software entrepreneurs to succeed in this country. Do you have any thoughts as to why there aren't more successful software ventures coming out of Europe?
Even with the existence of the EU?
Liautaud: Yes. You do business in France and it's not the same as doing business in the U.K. or Italy or Germany. That creates a bigger hurdle for companies as they develop themselves. There's also a little bit of a vicious circle going on. Because you don't have that many (local tech) companies, you have to develop the talent pool, whereas if you're starting a company in Silicon Valley, everyone knows where they can find the right people.
In a Goldman Sachs survey I read, 79 percent of the respondents said they expected to buy business-intelligence tools or applications in the next year. Has there been a change in the mind of IT about these tools?
Liautaud: IT has viewed business intelligence as a key priority for quite a while. The trend is there because you have a number of companies nearing the end of their implementation of ERP and sales force automation and looking around and asking, "We've done all this work but still don't have good insights into the business." And that's the next step.
We think there's a huge issue in companies today. They have trouble managing their information. They have huge overloads of data, and because they don't use it properly, they make lots of bad decisions because they make it on gut feel, and not on the data. Our mission is to ban ignorance: We want to enable the intelligent enterprise.
Your Q2 numbers beat estimates. But the competition is heating up. Do you think your segment of the business likely will get more intense come the fall?
Liautaud: In all markets that become more visible with more growth--competition should be expected. In the past year or so, we've really taken a leap forward to become the clear No. 1 in
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ERP consolidation game is over. Now its turn of BI and Analytics companies.
It will be interesting to watch BO in the next 12 months, especially post its acquisition of Crystal, it has managed to reach the number 1 slot pretty swiftly. Remember, acquiring companies and managing huge resources is no easy task for any company.