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Interview with Jeffrey Beir, CEO/President of eRoom Technology

By Angel Mehta, Managing Director, Sterling-Hoffman Management Consultants

As the CEO of eRoom Technology, Inc. (www.eroom.com), Jeffrey Beir is well aware of the need for strong leadership during difficult economic conditions. A graduate from Lotus Notes, Jeffrey saw an opportunity to create applications that brought the ease of use of the desktop environment into extended enterprise collaboration. Unlike Groove Networks, eRoom brings together cross-organizational teams to work on mission-critical projects and assignments. Spread out amongst multiple organizations and even countries, teams have the ability to instantly track project status, are able to hold real-time chat meetings and manage documents.

Jeffrey shares his thoughts on what it takes to be a CEO of a startup software company and the lessons he has learned along the way.

Sterling Hoffman: Why did you leave Lotus notes to startup eRoom?

Jeffrey Beir: When IBM acquired Lotus, it provided a huge platform to take Lotus to the next level. I did that for 6 months or so, but then saw the opportunity to go do something that was based on Internet technology along with opportunities created around VC funding Internet based companies. At the time the commercial Internet was beginning to explode, mostly for consumer applications and the beginning of online purchases. I saw the opportunity to bring the ease of use of the desktop applications world, what I spent a lot of time with at Lotus, to create an enterprise application using the web as a platform. It was a strong pull to go do something else.

Sterling Hoffman: Was it a pull to make money or build brand new technology?

Jeffrey Beir: I’ve always been a builder; even as a young kid, I loved building and creating things. I’ve always had a strong desire to create a company, build something from scratch and create something that had huge market impact.

Was the financial opportunity a part of it, yeah, somewhat, I had lived through the early PC era (1981) not in a leadership role but more in a supporting role, saw the huge opportunities and the wealth that was created in the early 1980’s. I saw that same opportunity from a grander scale in the mid 1990’s and if there was a point where I was going to scratch that itch to build my own company, that was the opportunity to do so.

From a technology perspective, there certainly was a large technology transition that was underway. The classic client server desktop applications were going to be somewhat less relevant and the opportunity to leverage the technologies provided by the Internet to connect enterprises together presented a technology shift that to me meant, and to many meant, huge market opportunities.

At the same time (in 1996) there was a fair abundance of venture capital and I had developed some relationships with the Venture folks over a period of years, and they were doing their fair share of pulling on me to go get something started as well. So, it was an opportunity to take many of the ideas I had, tie it to a technology transition and then go test the waters to see if, in fact, I could create something that could get funded and begin to build a company.

Sterling Hoffman: Are you glad today you scratched that itch?

Jeffrey Beir: I love what we have built here at eRoom and I love the job that I have here as a CEO, it’s a fabulous mix of challenges, variety and fun. So, yeah I’m thrilled that I did this.

Looking back, Lotus was great learning ground, I spent 10 years there, met and learned from some wonderful people. But it was time to go do something else. And there is incredible amounts of learning you get from being a first-time CEO. Trying to figure things out without a road map in front of you, making some mistakes and learning from those mistakes.

Sterling Hoffman: Why don’t you tell me about some of those mistakes. Give me an example from the early days, as a brand new CEO, the kinds of challenges you had overcome and how you learned from them.

Jeffrey Beir: Ah many (laughter). There was one very challenging time in the early days of the company. Within 6 weeks of raising the capital to get eRoom started, we had built a prototype of eRoom and I was on the road showing it to old friends, prospective customers, industry analysts, even some Press. I went out on the road, east and west coast, north and south, showed it to probably two-dozen different customers and prospects. And the response to the prototype was, you know, positive. I was getting comments of “very interesting”, “this is nice”, “we could probably use this” and I’m logging this in the back of my mind thinking, “this is great, I’m getting good feedback”.

Towards the end of this tour, I ended up showing it to an individual on the West Coast, soneone I worked with when I was at Lotus, and respected his opinion immensely. He knew me well enough not to pull any punches. He said to me, “You are going to get killed. This is wrong, it’s the wrong approach.” When I paused and reflected on what he was saying, and then went back and looked at the comments that I had been receiving from others customers, I realized the feedback was not that positive, that it was neutral at best. And on the flight back from California, I’m thinking, “He’s right, we’re going in the wrong direction, we have to change direction”. This was right after I had raised 3.5 million dollars from two leading VC’s, we hired about a dozen people that were already hard at work and I’m flying back from California thinking, “I made a mistake. We need to make a change here. What do I do?”

Sterling Hoffman: And so, what did you do?

Well, I did what my instincts told me to do. My instincts told me to engage the team in the problem. Share openly the challenge, share openly the feedback and enlist the team’s help and the Board’s help in figuring out what we do. I had to overcome the fear of coming back and saying, “It’s wrong, we have to go in a different direction” and the whole team bails or my investors say we want our money back (laughter). And also overcoming the insecurities that we all carry around in the deep recesses of our brain and realizing, “gee, maybe I wasn’t cut out to be a CEO”. So I did what had worked for me for many years prior to that event, be direct with people, tell them the honest truth, lay out the problem and engage people to help solve the problem.

Sterling Hoffman: Clearly that helped, because you’re still here today, right?

Jeffrey Beir: It did help; we actually did a 180-degree turn. We had the entire team figure out which direction we should turn because it wasn’t clear. And we all came back aligned on a new strategy. As a result of this, we built a much stronger team because there was more trust, open dialogue and communication. Everybody got on the same page about what we needed to do and within a month we had more momentum and were further ahead then we were when I came back from California.

So that was a big mistake, a scary time for me, but one that I think provided a lot of the foundation for the culture and values that we have at eRoom.

Sterling Hoffman: Let’s talk about eRoom’s culture. Do you feel that eRoom is a reflection of you as a Leader, what you believe in and how you treat your people?

Jeffrey Beir: It may be that it reflects the CEO, reflects me, I’m actually more proud that the values and culture of eRoom are created by the collective whole of the people that are here. Now, it may be by design that people we hire, therefore the people that they hire and the values that we ultimately share is a selection process. But, you know, fundamentally, the culture and the values we put in place from the beginning, and not just me, but the founding team and the early engineers, believed that that was the way we would build a company of value and would be built to last, to use a trite phrase.

I remember early I didn’t have much to talk about in a board meeting except for development progress and how we were building the team. And I remember spending a lot of time talking about the values, the culture and some of the benefits and HR practices we were putting in place and frankly, my board didn’t have a lot of interest in those topics. Yeah, they almost didn’t feel they were, at the time, board topics that needed to be brought up. As time has proven though, I think they’ve come to appreciate that [the culture] has created a backbone for a company like eRoom. It has allowed us take on very difficult challenges, make changes mid-stream, hold people together and hold the team together. Through great times, when it was difficult to hire and there were a million jobs out there, to tough times when there weren’t a lot of jobs out there and yet we needed to keep people focused and excited about what they were doing. And I think, underlying all that is a culture that people believe in and that’s why they stay more then anything else.

Sterling Hoffman: You’ve talked about tough times and times are tough right now, has that changed the way you think about IPO’s?

Jeffrey Beir: Well, what’s an IPO (laughter). When I was at Lotus and I had a fair amount of visibility with Wall Street because I was heading up the Spreadsheet Division at the time. It was also during a period in which Lotus was being severely challenged by Microsoft. We were behind and we were playing catching up to Windows. And so I got a good taste of how challenging the public markets can be on the company and how it can sometimes deflect you from your longer-term objectives.

What happened during 1999 and 2000 wasn’t real, you know, there were companies that weren’t high quality companies or weren’t really companies that should have gone public, they were private companies that should have remained private. And, at one level, we are back to normal times, in terms of the types of companies that should be public. Companies that are well managed financially, predictable, have real business models and revenue models that are profitable.

So I think what we are seeing right now, perhaps the pendulum has swung a little too far in the other direction, but the types of companies that will emerge, will be much higher quality companies then the companies that went public in 1998 to the year 2000.

What we are doing right now, is just putting our heads down and growing a profitable software company and continuing to improve our systems, our products, our predictability and improve the profitability in the business. When the market returns, we will be very well positioned as a strong public company that investors will value.


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