By Gary Flood
Just before he was made to walk the plank thrown over the side of the then capsizing ship called Sybase Inc last August, its then chief executive officer Mark Hoffman drove from his Emeryville offices in Silicon Valley a few miles across to the East Bay town of Concord, to investigate an obscure former electronic catalogue company. This was at the urging of a friend who happened to be on the management boards of both Sybase and the fledgling new operation, DistriVision Development Corporation, founded the first day of 1994 out of the roots of an older company called VTI, Vertical Technologies, Inc. Hoffman knew he would soon be asked to step down at Sybase’s helm in favor of Mitch Kertzman, and his original plan was to take some time off from running big software companies altogether, maybe set up his shingle as a venture capitalist, generally decompress after the turbulent years of growing Sybase to a $1bn operation. But on his way back to the office after seeing DistriVision, he couldn’t help thinking: I know the next ten things this company has to do to grow. But his next thought reflected his dilemma: Yeah, but do I want to be the one to do it? A few weeks later he decided that the challenge and growth opportunity DistriVision represented were too compelling, and that he was going to be the guy to do it, a decision he plainly doesn’t regret nine months after joining the Concord outfit as president and chief executive – though he now laughs that his fellow board member really just sucked him into the fray once again.
DistriVision had been laboring away in relative obscurity developing a product, now in its fifth version, called the REOS Real-Time Electronic On-line System transaction server, which runs on Microsoft SQL Server under Windows NT. The system is built in C++ and adopts an object-oriented approach to the handling of electronic transactions, turning orders or reservations into objects. But what Hoffman and the rest of the senior management team he has recruited the past few months – some directly from Sybase like vice president worldwide sales Jeffrey Mandelbaum, vice president professional services Michael Hastings and chief finance officer Peter Pervere, others with Sybase on their resumes who had been in interim roles, like vice president Marketing and Business Development Charles Donchess – have done is refashion the whole company around the idea of selling REOS as a way of automating the business-to-business aspect of electronic commerce. Renamed Commerce One Inc, to reflect the change, the company, now based in larger offices in Walnut Creek, was launched two months ago with $7.3m venture financing and a decided emphasis on attacking the back end of the web commerce market, not the front. Whereas one mostly thinks of the process of using a web page to browse catalogues or directories and doing little more than entering an order for some CDs, or a book or two when talking about electronic commerce, Commerce One holds that the real opportunities exist for helping procurement departments in Fortune 500 companies automate the process of buying and ordering from their suppliers – a kind of super EDI electronic data interchange, using the web as the transport layer, but REOS as the server. Commerce One has a customer-business client called SupplySite, which it holds is a transaction engine that a business could use to help build the common or garden web proxy catalogue we are all familiar with. But it says that 90% of its efforts are being directed at combining REOS with BuySite, a product still in beta, which enables simultaneous browsing and ordering from the many catalogues from a large corporation’s numerous suppliers send it. Every new company has to have, presumably by California state law, a stunning statistic from a research firm identifying its potential market, and so Hoffman and Donchess quote the Giga Information Group zinger that the equivalent of 5% of all US Gross Domestic Product, or $250bn, is spent every year by corporatio
ns on the overhead associated with the processing of paper documents related to commerce, such as purchase orders, invoices and statements. The company believes this area is one of the last few business processes that have yet to be effectively automated. For between $500,000 and $1m, then, customers – Commerce One/Distri-Vision before it having racked up about 50 in the last four years – can use its Commerce Chain of products to better control this process, and use the web to do so to boot, in order to both sell their products better electronically and buy their products better electronically, in Donchess’s words.
For a company that has only really had any clout since Hoffman joined, it’s moved fast; staffing has gone from 25 last September to around 80, it plans international operations within 90 days, and it has already signed up two OEM customer deals, with accounting systems providers Walker Interactive Systems Inc and what was formerly Dun & Bradstreet Software and is now Geac Computer System Inc’s EnterpriseServer host-based software division. Plus, though the company is building a direct sales force, it is hinting that a number of Big Six systems integrator partnerships are in the pipeline too. Commerce One is not the sole player that has spotted the ‘super EDI’ opportunity, the closest rival technologically being Cambridge, Massachusetts, Open Market Inc. But Open Market doesn’t have Hoffman, who joshes that though on his own he may not guarantee any $2m deals, his name was pretty much all that was needed to get the venture capital money – and his new company is obviously given a certain halo effect by his being at its head. Hoffman is convinced that the growth opportunity at Commerce One is equal to or even better than he saw in Sybase’s early days, and though the end of his watch was not a fortunate one it must be remembered that Sybase had previously exhibited a rapid growth pattern worthy of the Andromeda Strain itself. We must assume he does know the next ten things that Commerce One must do, and they will probably happen in short order. Though not as sexy as mainstream electronic- commerce notions of the raw terror of hackers ripping off your credit card number through using the web, the idea of being able to on-line order the cheapest new conference table or laptop, after comparing prices and availability from suppliers, is one that hard-pressed corporate purchasing departments will surely warm to.