Chapter 53. Spin-offs

While we continued to push the envelope with these kinds of software innovations, Rick also continued to try to find the right business model. PW had started a number of software initiatives in the early 90’s including Activa II, an activity-based costing, budgeting and management software package, and Array, a COBOL system analysis tool, to build products, and at the end of the decade only SAFR was still around. Some had been sold, like Activa to Oracle, and the others had folded. Our sales experience showed PW did not have a software brand. Based upon the close connection with the mainframe, Rick decided to see if IBM was interested in buying the software. In the fall of 1999 after a couple of meetings they said no.

Next, having gained an inside look at the software, Troy Deck at Wingspan decided to take a shot at purchasing it. Troy worked very hard to raise capital, but couldn’t raise the required funds, the amount of which seemed to me to inflate dramatically when ever someone showed up with a wallet. Raising significant capital was nearly impossible as well because PwC was an auditing firm. They couldn’t engage in any type of investment activity with any audit client or anyone that invested in audit clients. With the size of PwC and the interconnected nature of capital, it probably seemed to Troy that only two little old ladies in Iowa qualified to provide funding and they weren’t interested. Having successfully helped to build the new user interface and assisted in porting SAFR to client server, Troy finally gave up early in 2001.1.

Somewhere in 2001 Rick got connected with Bob Beech and Digineer. The end of November they wanted to meet an existing customer to kick the tires so to say, so I hosted some of the employees at the Insurance Company. A joint venture was signed between PwC and Digineer in January 2002. The chip manufacturer was to provide some level of funding; the idea was to create a SAFR product that could work on a specially designed computer box. I remember Bob describing the self contained event repository with SAFR’s ability to get through it quickly as a Hubble telescope beneath an employee’s desk.

Soon thereafter I was invited by Bob to join Rick on a trip to Cincinnati, the company headquarters. The next day a coworker joined Bob and me to visit a professor at Vanderbilt University, a leading authority on Medical Informatics. Digineer’s roots were in informatics and Bob wanted to validate that SAFR could be applied to the medical field.

It was exciting to have someone interested in the tool we had built, attempting to articulate its value, and to apply it to new subject areas. Yet launching a new business in the wake of the Internet bust was a difficult proposition to float; within a few months Digineer went out of business.2

In December of 2001 Enron failed, the largest US bankruptcy ever. The conflict within Arthur Anderson between auditing and consulting was partially blamed. I remember being amazed at the newspaper coverage in January when my business and even my firm were mentioned daily on the front page. The result was a set of new regulations that auditors could not consult with audit clients. Fear swept the PwC client base; the impact of the economy already weakened by the Internet bust and September 11th now started to hit very close to home.

PwC had considered selling the consulting division to HP for $19 billion, a year and a half earlier. Now with each passing day the value of the business dropped precipitously. It was a burning platform. Something had to be done immediately to avoid the same fate as Arthur Anderson. Leadership determined to spin off the consulting business through an IPO.3 Even though PwC was an accounting firm, with experts at implementing every conceivable system, its own internal systems were woefully neglected. Because they weren’t a public company, they had almost no external demands for investing in the systems. Suddenly the need for internal systems became critical.

As I drove to the airport when I left Digineer the afternoon of February 8th, 2002, Rick asked the team to join a conference call. He explained that he had been charged with building a reporting system to show PwC’s revenue and costs by industry, a key aspect to understanding its business in preparation for the IPO S-1 filing. He recited a number of aspects of the problem that he was not responsible for with a certain sense of relief. The deadline was now July 1st. The S-1 had to be filed even earlier, so our team had even less time.

The race was on. We were to be tested to see how quickly we could build a reporting system using the concepts of a business event based architecture.

1 The Wingspan web site notes: “Mr. Deck led the successful development effort to extend GENEVA technology to client-server.”  Troy and Wingspan went on to develop a successful business and products supporting content management.
2 Bob went on to become a successful CEO of another life sciences company which was successfully purchased by a leading company in the space. He continued as the Senior Vice President, Corporate Development & Communications after the purchase.
3 We later learned they had chosen the name of the company to be “Monday.” I remember everyone trying to reconcile themselves to the name and a great deal of relief when it didn’t happen.