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Will the enterprise market spend significant IT budget on Windows Vista in 2007?



CEO Spotlight: Francis deSouza, IMlogic
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Francis deSouza: Yes, the first big surprise was how much grass-roots adoption IM already had in the enterprise market. One of the perspectives I had was from selling enterprise instant messaging solutions for Microsoft and they had certain stats around enterprise IM uptake. I found, at IMlogic, there was actually vast usage happening in companies based on the public networks that had been around since '96. I didn't expect that. 

We have IM Detector, which is free, that you can download from our website and it will give you a snapshot around the instant messaging use in your company. Once companies started downloading, everyone was surprised to discover just how much instant messaging was happening. It wasn't the instant messaging that was being rolled by the IT departments but people just downloading consumer instant messaging clients like AOL, MSN and Yahoo! and using it. 

I remember one CIO who said, "You know Francis, we're one of the largest financial services firms in the world, we run the world's business and we don't run it on instant messaging. I know what it is because my daughter uses it at home but we don't use it here". Five weeks later I got an e-mail from him and he said, "After our conversation I was intrigued, we downloaded IM Detector and found over 20,000 AOL instant messaging users in our company. We need to talk". 

Angel Mehta: What value do you feel your involvement in private equity has added to you in terms of shaping you as a CEO? 

Francis deSouza: Most certainly it was valuable in terms of learning how venture capital worked, the process of how you go about raising money, and understanding the terms associated with raising money. It was great for me to know what was and wasn't important to look for in a VC firm and in a term sheet. So I felt like I had a good understanding on what I wanted from our VC partners and also what terms I was going to focus on.

Angel Mehta: I noticed outside on the list of extensions at front desk that your staff list is pretty slim! How are you able to continue staying lean even as IMlogic grows?

Francis deSouza: Through the late 90s and early 2000 we learned three important things. First, you can leverage technology to do things as a company with fewer people, certainly with the advent of salesforce.com and better engineering management software. There is infrastructure available today that we just didn't have when I did my last company in the mid-90. We are very aggressive about adopting that to help us remain as lean as we can. 

Second, we learned that cash is important. You want to remain as lean as you can, conserving the cash you have and getting a bang for every dollar you spend. I think that was a lesson everybody had to learn back then and we've taken that message to heart. We are very careful about how we spend our money.

Third, we look for sales leverage, whether that's through resellers, or through strategic partners. We also set up an adjunct offshore development facility in India, again as part of gaining the leverage and growing while remaining lean.

I think we've learned over the last decade what allows a company to scale and, you know, we have over 500 customers today in 26 countries and yet remain a lot leaner than we could have, even a decade ago.

Angel Mehta: Earlier you spoke about culture and how Microsoft manages to keep, in some divisions, that small company culture. Do you take active steps to drive IMlogic's ideal vision for a culture?

Francis deSouza: Absolutely. In fact, one of the things that I did differently for IMlogic was exactly that. Very early on we sat down and thought about what was important to us and came up with the four values of this company.

They are leadership, integrity, customer focus and excellence. We have written out what each means for IMlogic. It goes something like this…

Leadership…we are expecting people to take ownership of a problem and drive it all the way to resolution. We're willing to give people responsibility very early on and expect them to deliver the results. We hold ourselves accountable for the results that we assign them to and then we hold other people accountable and expect them to deliver what they've said they were going to deliver as well.

Integrity…you know, it's easy to do the right thing when everything is going your way. How do you behave when a customer says they don't want to buy or something else goes not the way you expected? 

Customer focus…is not just about the Sales V.P. or the Marketing team being customer focused. The entire company has part of their bonus driven about our customer satisfaction scores. So we survey our customers a few times a year and publish the average score and everybody's bonus across the company is driven by that score.

Excellence… this starts with recruiting and our reference checks. Somebody has to say that the candidate is the best person they've ever worked with. You have to be very good at what you do. So if you're in sales it's about consistently hitting your numbers and engineering its delivering high quality product on time with a high degree of innovation. 

Then we put together an incentive system around our economic, social and moral values. These incentives help each employee to focus on the correct values.

Angel Mehta: As you look over the next 12 months what is your biggest worry? 

Francis deSouza: How do we scale and maintain the culture? We want to ensure we are doing the right thing by our people and that includes the key people who are employees and our customers. It's especially challenging as you are going through a period of very rapid growth, like we are right now. We're adding people but we want to make sure we're not diluting the culture. We're growing and continuing to conserve our core business at the same time.

Angel Mehta: Is the vision for IMlogic to become a hundred million dollar vendor… or a fifty million dollar vendor… and then exit? What is realistically possible in your mind?

Francis deSouza: There are between one and two hundred million desktops in the corporate market around the world, each of those desktops has e-mail and will likely have IM. Each desktop generates about $8 a year for e-mail security; we're talking about somewhere north of a billion dollar market. So we have a market at least as big in the IM world. Today we are the market leader in that space but it's very early, so we have a sizable opportunity ahead of us that will unfold over the next few years.

Angel Mehta: How heavily do you rely on your board for inputs into operations?

Francis deSouza: Very heavily. We are lucky to have a Board with operational experience. They've all come to the VC community having run companies before and I find that personally very helpful. They'll often get calls from me as we're talking about a strategic issue or thinking about how to expand into a new region. I find them very helpful to bounce ideas off, to talk to about how to structure the organization or how to launch new products. They're great.

Angel Mehta: Does work/life balance become an issue for you? What kind of hours are you working?

Francis deSouza: It does and it doesn't…I think the answer for me is not going to be "Well, these are the times I work and these are the times I'm at home." The answer is going to be integrated. I work at home and I sort of play in the office if you like. I have my wife and daughter come into work; we meet here and have lunches here. So between having the home office and my blackberry (which I'm able to access on vacation), I think the time line is really blurred, so I'm not even sure I can answer that question.

Angel Mehta: What advice would you offer CEOs or entrepreneurs who are struggling with the same thing?

Francis deSouza: You know, I'm not sure… I don't honestly feel qualified to give advice. I've come up with an answer that works for my family and me. What I would advise people is that early stage companies are a lot of work. Don't get involved if you aren't prepared to make the sacrifices. You and your family need to be very comfortable with that right from the beginning. There are probably many easier ways to make a living. It has to be among the more work-intensive career paths in existence. 

Angel Mehta: What do you wish you had done differently in your management style, perhaps earlier on? Is there an approach you wished you had taken earlier?

Francis deSouza: I wish I had really focused on the values of the company and used that as the biggest driver in deciding who you're going to hire. I've discovered, and I feel very strongly that if you hire smart, talented people who match the values of the company, you're almost always better off than trading that for a specific skill or experience. In the past I hired people knowing that they weren't exactly the right cultural fit but feeling that they had specific experience that would really help but that never really worked out well for me. So now, the first question is, "Is this person a great cultural fit? Do they have high energy, high integrity, and are they results-oriented?" Our culture is very blunt. On any given day, probably five times a day, somebody walks into my office and says something's completely broken and we need to fix it and everyone we recruit has to fit into that. Values matter.

Francis deSouza is Chief Executive Officer and founder of IMlogic. He is responsible for the overall management and leadership of the company. He brings more than a decade of experience in technology to his role, with a proven track record of successfully bringing products to market in start ups and large organizations. For article feedback, you can contact Francis at: francis.desouza@imlogic.com 

Angel Mehta is Managing Director at Sterling-Hoffman, a retained executive search firm focused on VP Sales, VP Marketing, and CEO searches for enterprise software companies. He can be reached for feedback at: amehta@sterlinghoffman.net


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