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| Home - CEO Spotlight - Jul 06 Issue |
CEO Spotlight: David DeWalt, EMC Software Group
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Angel Mehta: You mentioned you’ve done over 50 acquisitions throughout your career. What did you learn from the acquisition by EMC of Documentum, were on the sell side? What advice would you offer CEOs who are faced with the challenge of integrating their software companies into larger IT vendors?
David DeWalt: Probably, the biggest thing we learned was that you have to look at an acquisition through three lenses. You look at it through a financial lens to meet the revenue synergies and cost synergies required to make it accretive. Clearly, there’s a customer lens, which includes asking key questions such as how do we take care of our customers after we get acquired, and how do we integrate those customers into the bigger picture? And, of course, there’s an employee lens. The biggest problem that I typically see is most companies not paying enough attention to the employee part of the equation.
When you look at why acquisitions and integrations fail or succeed, most of it is related to the human capital side - to the employees. How do we retain them? How do we create a unique DNA from those acquired companies and fuse that into the larger corporation? How do we recognize the parts of that DNA we want to keep, and allow the employees’ entrepreneurial spirit to live on inside a larger company? The answer comes from acquisitions that have failed – we’ve all seen them before.
On the other hand, EMC has managed, I feel, to successfully integrate its human capital. Three years after the acquisition of Documentum, I’m here, my employees are here, and we’ve had great retention of the key talent in the company. Nearly every CEO of all acquired companies we’ve done is still at EMC today. We pay particular attention to keeping the management and the employees as part of the culture… really, we’ve become experts at cultural integration and recognizing people’s talents.
Angel Mehta: It sounds like a huge source of pride for you…
David DeWalt: It is, Angel. So back to your question: my advice would be -- pay attention to the employee side of the equation. Almost everyone screws up and focuses purely on the financial or customer side. Well, employees drive the customer and financial returns.
Angel Mehta: Where does a person learn how to manage hyper growth, unless they’re fortunate enough to have done it at a previous company?
David DeWalt: It’s hard to say, because quite honestly I had the good fortune of being at a number of companies that had high growth over my career. During my time at Oracle, the company was literally doubling every year, and I had the good fortune to watch and learn from that change in business scale. The year I was at Quest, we had tremendous growth and went through an IPO. So those job experiences were irreplaceable. I don’t know any other way to learn how to scale except by working for companies that are facing the challenge here and now, and by working for people who have done it before. The basic principles are straight forward: understand the key operating metrics, design a strategy that every employee can articulate, and stay focused. But it’s easier said than done. You want customers to be able to say exactly what your company does in a few words or less. If you can get your offering down to a few syllables, you’re on the right track – otherwise, it becomes too complicated for people to understand what you do.
Angel Mehta: If you had to place a bet on one or two variables to drive growth, would you favor people or the market?
David DeWalt: I’m not sure I’d ever settle for a mediocre team. I mean certainly you want to surround yourself with super stars, and I’ve had that good fortune at Documentum and elsewhere. How many times have you heard this? You always have to hire people who are better than you in each functional area and then delegate. That’s the best thing a CEO can do. But at the same time, you have to be looking at the entire chess board and constantly determining how to move your business to the most lucrative areas of the market. If you’re not monitoring the market, even the best team will fail. So, it’s a combination of the two – it’s not one or the other. I’ve never seen strong teams missing a great market opportunity. If they’re driven and experienced, they’ll find it.
Angel Mehta: You’ve been with both large and small companies… which was more fun?
David DeWalt: When I ask my kids what their favorite sport is, they always tell me the same thing – it’s the sport they’re playing right then. It’s sort of like that for me in business as well: whichever one I’m currently doing, I love the most. My experiences with a small company were phenomenal; it was a family. I mean it was the most passionate, proud, family atmosphere, we lived and worked together, we were friends, we just bonded and it was an incredible experience. Fast forward to Documentum… look, figuratively speaking, I’ve got a Documentum tattoo on my arm. I’m so proud of it, and I think everyone from Documentum would tell you the same. And EMC, talk about a great company through and through. I can’t say enough about how impressive EMC is, all the way from business strategy to the way it treats its people. So it’s really not a question of liking one or the other for me – I love both large and smaller environments for different reasons.
Angel Mehta: As an outsider reading your bio, it would appear that you’ve had nothing but wins and big breaks throughout your entire career. Is that true? Or were there dark times?
David DeWalt: Of course, there were dark times. My time at Adventus Software was tough… it was a small company with a wonderful idea for web content management – the internet was just starting to go – and we had no cash. We were competing with Interwoven and Vignette – both small companies at the time – and there was a race to get cash from Sand Hill. We were short and were living hand-to-mouth for several months, trying to bootstrap the company. If we didn’t sell software and collect the cash from a customer, we couldn’t meet payroll. And you know what? There were several months in a row where we COULDN’T meet payroll. We had to figure out ways to get bridge loans and survive. All the while, we were talking about M&A and Series C financing, building product, and keeping the team together… it was incredibly challenging. I barely made a dime, but it wasn’t about making money. Sometimes you choose a role to learn as much as you can… and you’ll forego money for that.
Angel Mehta: If there was one thing about leadership that you would want to teach the executives you are mentoring or grooming as possible successors, what would it be?
David DeWalt: That you can’t lead by telling people you’re the leader. You have to lead by example; setting the right pace and the right culture, being an open, honest communicator. The more honest you are, and the more forthright you are, the more people will follow you. An open-communication atmosphere makes it so much easier to overcome difficulties. If the atmosphere is positive, you can move mountains within the business.
Angel Mehta: What advice would you have for another corporate leader facing some sort of crisis event in the company?
David DeWalt: That’s an interesting question, because you don’t understand your culture or your identity until you go through a crisis situation. When things are great, it’s hard to tell. But when things go bad… that’s when you really know how people feel. The greatest thing you can do is not during a crisis, but before one. You need to instill an emotional attachment and passion in people for the company, so that when the crisis hits, you’re not the only one reacting to it. You simply cannot handle a crisis situation – any crisis situation – by yourself. At Documentum, the biggest crisis event was easily 9/11. It occurred two weeks before the end of the quarter… we were devastated. We didn’t get a single order. Lost a ton of money, and had to lay people off… can you imagine? Laying people off after an event like that? But we had no choice. At the same time, you should have seen the commitment of our group and the power of our culture take over – it was amazing. So how does a CEO deal with a crisis situation? You DON’T. Instill the right culture, and your people will handle it for you.
David DeWalt is President of the EMC Software Group at EMC Corporation. He joined EMC in 2003 when EMC acquired Documentum. David’s 18-year career in the technology industry spans engineering, product management, marketing, and sales management. For interview feedback, contact David at david.dewalt@documentum.com
Angel Mehta is Managing Director of Sterling-Hoffman, a retained executive search firm focused on VP Sales, VP Marketing, and CEO searches for enterprise software companies and lead investor in http://www.softwaresalesjobs.com, the # 1 site for software sales jobs. Angel can be reached for feedback at amehta@sterlinghoffman.net
 
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