Tibco CEO seeks a second wind after changing direction

Once known for integration, Tibco is driving into analytics - and enjoying life away from the stock markets

Tibco was among the leading pack of established tech companies fleeing the forced march of disclosures and relentless pressure to deliver stock price growth that is life on the public markets when private-equity firm Vista Equity Partners acquired the Californian software company for $4.3bn almost three years ago.

PE firms buying tech firms is often regarded as a fast drive to the inner circles of hell where cutting costs to the bone and milking the cash cow of maintenance fees is the modus operandi but Tibco might be showing that there is life after PE.

Murray Rode took over the CEO role a few months after the Vista deal was announced and he says that the relative privacy afforded by de-listing provides the space to breathe, rethink strategy and go again. A former CFO himself with experience of taking Tibco public in 1999, Rode tells me that life on the public markets had become tougher.

“It changed,” he says, in an interview at the company’s recent conference in Berlin. “Activists became a bigger part of the landscape and the biggest thing is how fragmented [the technology sector] is today, even for the buy-side analysts. Being private for us has been good because it enabled us to really focus on the strategy of the company. We wanted to make a shift to [accounting based on a sales/accounting model of] recurring revenue and I did not have to explain that to 30 or 40 people.”

Besides, he says, there’s the old view and of PE as a deathly embrace and world where innovation goes to die, and a new tranche of more adventurous firms that understand tech, have deep pockets, benches of experienced experts and a desire to pursue growth, not stasis.

“Traditional PE is quite a bit different to what PE has become,” he says. “It used to be about milking cash flows but this new breed of PE company reflects two things. One, they’re very tech-savvy and all they invest in [at Vista] is software. The second thing is just the amount of capital. PE is paying valuations equivalent to ‘strategics’ [vendor merger-and-acquisition buyers] or IPOs. And Vista is very focused on fostering companies that are operationally excellent.

“Generally, PE buyers have become more aggressive and you have to look to growth as another avenue to create value. The traditional industrial PE just has a very different kind of focus. They don’t care about growth but other ways to monetise the hard assets of a company.”


Ch-ch-ch changes

Tibco was going through other changes at the time it signed its deal with Vista. The company had grown far from its roots in integration software and was perhaps becoming leggy with too many SKUs and a resulting lack of focus. Also, founder and CEO Vivek Ranadivé had in 2010 bought an NBA basketball team, the Golden State Warriors, and then later was part of a group buying the Sacramento Kings, leading to inevitable concerns and whispers.  

“That’s a harder thing to describe in the sense that Vivek was still very focused on the business but he had bought the Kings and that did become a question as to whether that was too much of a distraction,” Rode says. “The Tibco business is simpler today that two or three years ago [after refocusing]. We interconnect everything and augment intelligence. We provide software to connect devices and systems, IoT and analytics.”

Rode says that big-lever changes in strategy and operations – for example, re-gearing the sales operation to focus on more on cloud service subscriptions rather than big-ticket on-premises sales, centralising disparate business units, and concentrating more marketing spend on digital – would have been more difficult to do under the glare of the public markets.

But with those changes made, Tibco could yet return to being a public company. 

“That is certainly one of the options,” Rode says. “Ultimately, PE investors will want to realise the value of their investments.”


Another bite

Few companies in Silicon Valley get a second wind, reprising their original growth stories with new products for another generation and zeitgeist, but Rode wants to be among their number. Was there an inspiring example he saw when sitting down to write a second episode for the company?

“Apple of course in the Valley is an example of reinvigorating and cannibalising your existing market,” he says. “The other company was Adobe in shifting its business to the cloud. The transition [Lou] Gerstner did at IBM, and what SAP did in the cloud too.”

As with any mature software company, Tibco is in the crosshairs of younger rivals such as MuleSoft, SnapLogic and Dell’s Boomi, I suggest.

“For sure MuleSoft; SnapLogic is still pretty tiny,” Rode muses. “In the 15 years of being a public company we counted something like 19 companies in our space come and go. MuleSoft took a long time to find its way from being a quasi API management company and is still quite narrow. Our primary competition is still IBM but their attention has moved over a lot to Watson and less on the connectivity infrastructure. Oracle is still a big competitor to us - and Pega in part.”

Rode concedes there are still risks associated with changing technology trends, exposure to certain markets, currency markets and ability to hire top talent. The company might also have to tweak for attacking certain vertical markets and geographies but Rode says Tibco is enjoying a new lease of life, pointing to above-average growth and a series of acquisitions to bolster analytics.



He’s backed up in this by lieutenants. CTO Matt Quinn, a straight-talking Australian and another Tibco veteran, says the company has been refreshed by the changes:

“Three years ago the stack was very, very broad and not as focused as it is today… it’s ‘integrate, augment and connect’ versus ‘anything’ back then. We got too broad too quickly and were perhaps investing in areas that were a little too far of a stretch in adjacencies, and that spread our salesforce a bit thin. Vivek always said the best times are ahead and I can touch and feel that.”

Mark Palmer joined Tibco with the acquisition of streaming analytics company StreamBase where he was CEO and admits that when he heard of the PE plan he fully expected to be on his way. “I thought ‘PE?’ ‘OK. Bye.’” But he stayed because the company has been reborn and saw tremendous possibilities as analytics, data science and digital transformation heated up, and appear poised to be entering a boom time, with Tibco having plenty of relevant capabilities to cash in.

Some companies effectively quit trying after initial success wanes, relying on services and locked-in customers to keep cash coming in, but a few (Blackberry is an interesting example today) come back in new clothes and reinvent themselves. Tibco gives the sense of being well positioned for that rare opportunity to have another bite of the growth cherry. Certainly, the spate of acquisitions (Mashery, Statistica etc.) and partnership/sponsorship of the Mercedes-AMG Petronas F1 motorsport team doesn’t fit the profile of a company reaching for the late-life, pipe-and-slippers routine.

“In ‘97 [Tibco] was very topical because everyone was struggling with ERP connectivity,” Rode says. “Then with SaaS there was a tendency to see what we do as falling out of favour. Now it’s going back to us: a single governance model and the realisation that for customers to be reinvigorated for digital transformation you need some connective tissue. It’s all coming back to us.”

Hard evidence? Well, Tibco supplied a few pointers: EMEA software revenue grew 32 per cent year on year in FY 2016, while the firm said that analytics business grew three times faster than the average for the sector and the integration business grew twice as fast as the market. These are indicators and it would be good to have firmer and broader numbers to back up Tibco’s claims of righting the ship. But as for producing wider numbers to back up his confidence, Murray Rode and his company have no fiduciary obligation to tell me. And that is the joy of being a private company.


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