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Publication Date: Wednesday, June 27, 2001

Tapping into the need for speed Tapping into the need for speed (June 27, 2001)

TIBCO's software quietly powers the Internet

by Adam Levermore-Rich

"Speed is God, time is the devil, and change is the sole constant."

Those are the words of Vivek Ranadive, founder, chairman and CEO of Palo Alto-based TIBCO Software, Inc. For Ranadive and TIBCO, it's all about speed.

TIBCO's software, which Ranadive likens to "plumbing," is designed to help data flow between and within companies in fractions of a second. Both the company motto and the title of Ranadive's book, "The Power of Now," extol the virtues of "real-time."

"Real time is at the heart of human nature. At the core of it, people have short attention spans. You do something fast and you're going to win," says Ranadive.

The 43-year-old MIT and Harvard graduate would know a thing or two about winning the speed game. With TIBCO, he has found a way to cash in on the human desire for instant access.

TIBCO's name might be unfamiliar to most, but its technology pervades Silicon Valley life. Whose software allows people to check their stock quotes on the Internet, through portals like Yahoo? TIBCO's.

TIBCO stands for "The Information Bus Company" and was founded in 1997. Its origin lies some 15 years back, though, with a company called Teknekron Software Systems, Inc. While at Teknekron, Ranadive developed The Information Bus, which integrated and delivered market data -- like stock quotes and other financial information -- for banks and other financial service institutions.

"We digitized Wall Street," Ranadive says. He recalls the '80s movie "Wall Street," where brokers stood and watched banks of video screens to get information. "You had 20 television monitors that you had to look at. What we did was get rid of all that and replaced it with a Sun workstation. All of that information could now be treated as digitized information."

The financial market latched on to TIBCO in a big way. According to Ranadive, trillions of dollars worth of transactions are handled by TIBCO's software every day.

"NASDAQ runs off our software," Ranadive says. "If our software stopped working, Wall Street would come to a halt. Goldman Sachs would stop trading, NASDAQ would come down, (and) Hong Kong Shanghai Bank would stop doing transactions."

By smoothing the communication channels between different parts of a single company, between companies and their suppliers, and between companies and their customers, TIBCO's software eliminates problems that arise when information is stored in different places using different applications. In addition, the software allows much of the communication to be accomplished without human intervention, which gets transactions closer to real-time. And that makes good business sense, says Ranadive.

"You reduce your cash-to-cash cycles to zero," he says. "You don't have money tied up in inventory. If you can figure out what customers want and order the things they need to give it to them just as they order it, then you've reduced your risk and your cost, and made the customer happy."

Despite the beating technology has taken lately, Ranadive is confident his company will continue to thrive. In March, TIBCO announced its first-quarter earnings would fall below expectation. While they nearly doubled their sales from the same quarter the previous year, they fell short of the $91.5 million that had originally been forecast. Between January and March, shares of the company fell from more than $38 per share to around $10 per share. A month later, the company cut about 200 employees, or 15 percent of its workforce. TIBCO executives also took a pay cut and announced plans to reduce travel, hiring, and other costs to deal with the economic slowdown.

TIBCO's stock has begun to rebound since its low point at the beginning of April. Eric Hoyer, a broker with the Palo Alto branch of Morgan Stanley, says that TIBCO's April 3 low of $6.75 was in keeping with the hit that other tech stocks took at the same time. But he adds that tech stocks like TIBCO have done better since April than others -- expressly because they took a bigger hit and wound up cheaper and therefore more attractive to investors. TIBCO's stock value has more than doubled since April.

For evidence that the stock roller coaster holds nothing over the company's future, Ranadive points to TIBCO's growth rate since its founding.

"In the four years that we've been in existence, we've grown faster than Microsoft in their first four years," says Ranadive. "And it's all organic. We didn't buy revenue by merging with other companies. It was our own growth. We did over $250 million in revenues last year. There's no company that's had that kind of growth in its first four years." Since 1997, TIBCO's revenues have roughly doubled each year.

The company is also continuing to form strategic partnerships. TIBCO and Sunnyvale-based Internet powerhouse Yahoo recently teamed up to produce Corporate Yahoo, a "customized enterprise portal solution" that allows companies to combine dynamic content from Yahoo with internal data like e-mail, HR reports and purchasing, all on a single Web page.

"A good portal is like a Web site on steroids," writes Ranadive in "The Power of Now." "It creates a customizable view for individual users, and it is dynamic, updating in real time as business services and content change."

Ranadive says that 80 million to 90 million people use Yahoo regularly, and many are behind corporate firewalls.

"This is a huge, huge value proposition for Yahoo," he says. "We've already signed up a couple of million desktops. This could well be the corporate desktop for all businesses."

Yahoo isn't the only company taking advantage of TIBCO's plumbing. According to company officials, more than 1,000 companies worldwide use TIBCO software as their e-Business infrastructure. And its customers are as diverse as they are numerous: Adidas, AT&T, Delta Air Lines, Enron, Merrill Lynch, Proctor & Gamble and Sony are just a few of the companies that have tapped TIBCO.

While the financial services market is a large part of their customer base, TIBCO is prohibited from selling its products directly in the market because of its license agreement with Reuters, which owns 60 percent of TIBCO's stock. Instead, the company sells its software through third-party distributors, often through Reuters itself. Cisco Systems also holds a minority stake in TIBCO, with 7 percent of the company's stock.

Ranadive says one of the keys to TIBCO's success is location. He believes that being in Palo Alto is a major competitive advantage, and he compares it to one of the world's most classic cities, Florence. "During the Renaissance it was the center of mankind," he says. "Galileo, Leonardo da Vinci, Michelangelo, Dante, Raphael, they all lived and thrived in Florence and sparked each other's creative efforts."

"I think Palo Alto is the new Florence. It's the hub of this valley, and it's the greatest place on the planet, in my view. There are incredible people here, a diverse culture, and it's a place where people don't really care where you came from, they care where you're going."

Wherever it is that Ranadive and TIBCO are going, you can be sure they're headed there fast.


 

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