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Are Sales Executives who have previous experience at large software companies (eg. Oracle, SAP, BEA, Siebel) better at selling than Sales Executives who have spent their entire careers at startups?



CEO Spotlight: Joseph Alsop, Progress Software Corporation

By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search

Angel Mehta: Progress has acquired several companies over the years and has chosen to let them continue operating independently as opposed to integrating them into one common organization. Why have you chosen to take that approach to M&A?

Joseph Alsop: The focus in terms of our overall M&A strategy is to achieve market leadership in important, defined markets as opposed to integrating each acquired company into one entity for the sake of exploiting cross-company synergies. We feel that being the leader in a market is the key to creating not just shareholder value but also growth opportunities for the people. So all of our M&A activity is around either enhancing the potential of one of our existing companies or product lines to become the leader in its market space. Or, if we acquire something that doesn’t fit into an existing business, that company has to have the potential of becoming a market leader when the resources and distribution channel of Progress Software get behind it.

Second to the goal of achieving market leadership in specific segments, we believe in the notion of companies collectively being more than the sum of the parts. This year, we expect PSC will be close to a $400 million company – but we’re still only a fraction of the size of the largest companies in our industry. Simply building a strategy around ‘getting bigger’ makes utterly no sense to me.

The key questions we ask are, “Is ObjectStore the leader in its space? Is DataDirect a leader in its space? Is Sonic a leader in its space? Is Progress OpenEdge a leader in its space?” That’s what matters. It’s usually better to be a big fish in a small pond than a small fish in a big pond.

We think there are plenty of $100,000,000 plus opportunities out there, and we want to go out and become leaders in those markets. Next year we will have three companies that will be approximately $30 million each. In a sense, each of them will be a pretty substantial company and in a position to grow.

Angel Mehta: How do you unify the cultures across each acquisition if you keep them separate?

Joseph Alsop: We don’t. Each company holds onto its own culture. Sonic has a culture that is clearly different from the original Progress (now Progress OpenEdge) culture. The sales people, the developers, everybody there is aggressive, driven, but a bit weaker when it comes to customer care. DataDirect, on the other hand, has a culture that is a little more aligned with that of Progress: it’s very customer oriented, but still has its own unique history that goes back through several acquisitions and divestitures over 15 years.

Angel Mehta: Would you prefer that they all take on the Progress culture?

Joseph Alsop: No. Allowing them to maintain their own cultures was done by design. The culture required to succeed as a $10 million company, or a $30 million company, is different from the culture required to succeed as a $300m company. Simply taking the culture of Progress OpenEdge and transplanting it to Sonic wouldn’t work – we’d just interfere with what makes Sonic so successful to begin with.

That’s not in any way to be critical of our original culture. It’s just that Progress OpenEdge is much more established and so there are natural differences in terms of what it focuses on.

Angel Mehta: I read an interview you once gave in which you mentioned that your biggest fear was still from startups that could emerge at any time. Given that the software market is clearly maturing, do startups still have a chance to gain any significant traction within the markets that Progress plays? Would enterprise buyers take a chance on a startup for critical infrastructure technology? If not, are you effectively saying to would-be software entrepreneurs to ‘give it up and go home?’

Joseph Alsop: Not exactly. I think that the opportunities have to be much more carefully selected. There are still opportunities but not for the kind of start-ups that we saw in this industry, say, five years ago or perhaps as late as when I gave that interview. If you think back to five years, people wanted to buy technology from start-ups. Now technology buyers don’t want anything to do with them. So the pendulum has swung back again.

The advantage that we bring to the marketplace is the creativity and innovation of a startup – because we allow the startups we acquire to retain those qualities and don’t get in their way. At the same time, those startups have tremendous financial stability behind them because they are owned by Progress Software. Corporate buyers never worry about ‘vendor viability’ when they buy from one of our companies – they know we’re not going anywhere. We strive to get the best of both worlds.


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