SDA: Jim, when you took over as the CEO for CodeGear from Ben Smith, in April this year, you’d mentioned that some of your main aims would be to build a direct sales channel and raise venture capital. Can you tell us how you’ve proceeded towards achieving these goals for CodeGear?
Jim Douglas: I don’t recall mentioning venture capital, but I certainly mentioned sales channel. Historically, the sales model for the tools business at Borland had been a mix of direct and channel based. The RAD products tended to be more channel based and the Java products tended to be more direct sales based. Part of establishing CodeGear as an autonomous business unit meant no longer relying on Borland as a sales channel. Therefore, the direct component of our sales model was significantly diminished. We have worked hard for the past year to solidify and expand our indirect sales partnerships, as well as establish a small, focused direct sales component to our model.
SDA: Jim, when Borland initially put up the dev tools division for sale, they received numerous offers. You’ve said previously that it was difficult – financially and operationally – to separate the two and that it couldn’t get to the type of transaction that made sense. Is CodeGear still looking to sell?
Jim Douglas: Per my previous comments, the software development tools group in Borland had never operated as an autonomous business. Therefore, the company could not adequately isolate the financial performance. In addition, the necessary operating infrastructure and associated controls were not in place to run an independent company. This made it very difficult to consummate a transaction.
The strategic end in mind is still to spin CodeGear out of Borland. Over the course of the this year, CodeGear has been operating as an autonomous business and we have worked hard to achieve the necessary financial visibility and put in place the necessary infrastructure to support moving forward with separation from Borland. We have not put a time line on pursuing and completing a transaction, but this is the strategic direction.
SDA: Jim, your focus in CodeGear has also been on technology, customers and visibility. Can you give us more information on the strategies you followed to gain branding and visibility?
Jim Douglas: Let me address this question in two parts. First company focus and then brand specifically. On the focus side, I believe in keeping it simple. Companies typically can’t focus on too many strategic initiatives without diluting all of them. We are primarily focused on three market facing initiatives right now. The first is all about getting back to our roots. Since the beginning of Borland, our native compiled tools (Delphi & C++ Builder) have been the foundation of the company. In the past couple of years, we have been increasingly trying to address a broader set of developer problems with these tools. By continuing to broaden the focus, we have begun to stray from their core competency. Delphi and C++ Builder are the best tools on the planet for developing GUI rich desktop and client/server applications. We are very focused on ensuring that we maintain their best in breed status in this fertile niche rather than trying to expand beyond their sweet spot. We have other tools in our portfolio to address challenges outside of the desktop and client/server domain.
The second area of focus is on open source tooling. Our goal is to enable customers to fully exploit the value of open source components by providing market leading open source tooling. The open source wave has been a tsunami! Open source has become and will continue to be an indispensable component of the software development landscape. A couple of things to keep in mind regarding open source. The first is why do companies use open source components? I believe there are four primary reasons to consider using open source components: 1) Access to innovation – leveraging the open source community gives you access to a much broader pool of talent than you can tap into using only internal resources; 2) the “hostage dilemma” – Open source can free you from over dependence on or being locked into a single vendor solution; 3) Focus on core competency – leveraging open source components in areas that don’t provide competitive differentiation (e.g. a standardized interface) enables you to focus internal resources on areas that do provide competitive differentiation; 4) Time to market – Access to open source components can jump start your development effort and enable you to improve time to market. Notice cost was not one of the four. Using open source components naturally can reduce your cost of capital. However, there is an offsetting operating expense that shouldn’t be ignored. Most open source components are developed in silos. Therefore, there is a real cost associated with validating quality and integrating components. We have developed a portfolio of tools that leverage best in breed open source components, coupled with proprietary technology in areas not served well by the open source community, integrated into an industrial strength software development environment. We remove the cost and risk associated with leveraging open source components.
The third area of focus is on emerging software development markets. According to International Data Corp (IDC), there are about 13 million software developers on the world in 2007. That number will grow to about 17 million by 2011. If you take a look below the covers, you will see that the strongest growth (in terms of raw number of developers) is coming from emerging major markets: India, China, Russia. Development is clearly shifting east. It is imperative that we are strong in the most significant development centers of the world. Although we have been present for years in each of these emerging markets, it’s important that we focus on growing our presence.
Now that I’ve finished my diatribe on focus, let me address the brand issue. Building brand awareness is a difficult task under the best of circumstances. Trying to build brand awareness as part of a carve out is a tall mountain to climb. It’s a multi-year effort. We just hit our one year anniversary as CodeGear. Although we have made significant progress establishing the CodeGear brand, we have a long way to go before it’s a household name in the development community. Fortunately for us, we have a couple of strong brand assets we can rely on prior to cementing the CodeGear name in the minds of developers. The Borland brand continues to be strong globally. Therefore, we are able to leverage their brand equity while we build brand equity in CodeGear. In addition, we have phenomenal brand equity at the product level. Brands like Delphi, JBuilder, and InterBase and extremely well established and carry a lot of positive momentum. We rely on their strength to support our corporate brand building efforts.
SDA: Jim, you've been quoted as saying that if you're not doing business with or in China, you will be soon -- or you won't be in business -- much longer. Can you please elaborate on this?
Jim Douglas: The “you wont be in business” line was hyperbole to make a point. China is on a mission. As a nation, they are blessed with an abundance of natural resources, have a very strong educational system and a strong bias towards education, a fairly low cost of labor, solid infrastructure in major metropolitan areas, and a centralized government that is focused on being a world leader. The combination of these assets creates a strong platform to grow their technology sector. An additional factor is the focus of the US venture capital community on investing in indigenous Chinese companies. Although many venture firms continue to invest in India, there has been a real shift in focus towards China.
SDA: Jim, What are the significant challenges in doing business in other Asian countries, specifically India?
Jim Douglas: I’d love to say there is some magic secret to success. However, it simply comes down to fundamentals. For a company of our size, picking the right partners that give us access to key market segments is paramount to success. In addition, establishing strong reference accounts and building necessary brand awareness are key. We’ve been very focus on these three activities throughout Asia, with a real emphasis on the India and China markets (it’s no coincidence I’m in India this week and will be in China in two weeks). Asian markets do present some unique challenges. The first is obviously piracy. In India, piracy is far less of an issue than it was even a decade ago. However, it’s still commonplace in China. However, this is not of significant concern to me. Spending our energy trying to prevent piracy is a losing battle. We’re focused on penetration and building customer loyalty (i.e. become “sticky” in accounts). I’d much rather deal with millions of pirated copies of our products (that we can slowly monetize over time) than trying to keep piracy in check and only having a couple of hundred thousand users out there. It’s a land grab. The more developer’s hands we can get our software in quickly the more successful we will be over time. The governments of major Asian countries are slowly starting to deal with piracy (just as the Indian government did). It won’t be going away anytime soon, but they know putting forth the effort is necessary if they want to be global technology players. The second unique factor is business model / pricing. Given the cost of labor is so much lower than in Europe and North America, the ratio of capital cost to employee related expenses is a lot higher. We have not had to radically change our price points to deal with this reality. However, we have to be open to new business models that fit the requirements of companies in Asian countries.
SDA: Jim & Ravi: David Intersimone recently suggested a new way of looking at the software development paradigm and suggested "capturing developer 'intent' via application factories." These application factories foster what David called "application-driven development," where the "structure, evolution, and logic behind developing an application is part of the application." Essentially this means that everything involved in developing an application is reusable. What are your comments on David's suggestion?
Jim Douglas: The essence of what David is alluding to is to increase the ability and intelligence of development tools to capture the “intangibles” of software development assets. The intellectual property that is traditionally lost when a project is completed. To turn these “intangibles” into reusable metadata and automation “components” that assist developers in not only reusing their source code, but reusing the ideas and intent behind how code works, and works together with other components to drive a solutions as “application factories”. The traditional approach to solving reuse and complexity is “yet another framework”, but that’s not what we’re talking about here. We’re really talking about tools that serve as factory generators that create application factories for an organizations own software development projects, source code, and technology stacks. The goal is to make software not only reusable from a “connective” perspective but from an intellectual perspective as well. To provide tools to facilitate this for the development teams and the individual developers.
SDA: Jim & Ravi: Unlike most overhyped technologies, ROR (Ruby on Rails) has earned its mantle and is already the 'secret weapon' of scores of professional web consultants. Does CodeGear's ROR tool meet with the current business needs?
Ravi Kumar: I got a good laugh out of your “over hyped” comment. As you know, Ruby has quietly been one of the most popular languages in the web development community for years. The big change on the Ruby landscape has been the advent of the Rails framework. The combination of the two creates a platform for not only developing richer web sites, but robust web-based and enterprise applications as well. The new “hype” around ROR is that it will encroach on the Java market. For the past couple of years, many people of been screaming for “an easier Java,” given how complex the Java landscape has become. Many believe ROR just might be “an easier Java.” One scenario you will hear frequently is ROR becoming the tool of choice for the client side, while Java remains the workhorse for the server side. With our new 3rdRail product, we provide a development solution that will cater to the needs of those focused on web development, as well as the expanded needs of those focused on developing web-based and enterprise applications. We think the market has significant potential and we plan on being both a thought and technology leader in this space.
SDA: Jim & Ravi: JBuilder 2007 has been built on top of Eclipse. How important is Eclipse in CodeGear's scheme of things?
Jim Douglas: Extremely important. Per my earlier comments, enabling customers to fully leverage best in class open source components is a major focus for CodeGear. Eclipse has evolved rapidly as a platform and has now reached the main stage . . . both in terms of technology capability and stability, as well as popularity. Depending on who you listen to, there are somewhere between 2.5 million and 4 million Eclipse users globally. We currently leverage the Eclipse platform in our Java (JBuilder and JGear) and Ruby on Rails (3rdRail) product solutions. In addition, we are active members of some of the more high profile Eclipse working groups.
SDA: Jim & Ravi: The eRCP (Eclipse Rich Client Platform) offers a great platform for developing managed applications with a rich user experience. How has the uptake of the RCP been going with Codegear IDEs?
Ravi Kumar: RCP is an excellent cross-platform client UI platform for building just about any type of application one can think of without the overhead of the development packages that typically accompany an Eclipse footprint. However, as a tool vendor we rely on and build on top of many of the development tool projects in the Eclipse Ecosystem including the JDT and DLTK, so for the majority of our efforts the benefits of RCP aren’t applicable to us. However, RCP is a client platform that developers should certainly consider.
SDA: Jim & Ravi: CodeGear's innovation plans include a move into tools for dynamic languages like PHP & Ruby. What are some of the other innovation or trends you think the developer community will be excited about?
Jim Douglas: Three of the big hot buttons for development groups today are distributed development (i.e. remote teams), continuity (i.e. loss of productivity do to turnover and team churn), and reuse. The common element behind each of these is “knowledge” transfer. You will see some exciting new innovations from CodeGear on all three fronts. Earlier, you asked about Application Factories. This is a great of example of the out of the box thinking going on at CodeGear. We have a long history of game changing technology firsts, and you will continue to see us delivering innovative solutions moving forward.
SDA: Jim & Ravi: How does CodeGear compete when so many other tools such as VS.Net Express are completely free in the current scenario? Also, JBuilder ships in with an Eclipse plug in. Will this trend continue with other tools and what about developers using other IDEs such as Netbeans and IntelliJ?
Jim Douglas: One of the most important components of the CodeGear (Borland) legacy is the Turbo family of tools. It’s hard to find a developer that hasn’t heard of or personally used our free Turbo products (e.g. Turbo Pascal) at some point in their career. We reintroduced the Turbo line of products late last year as our entry level solution. We will continue to offer these entry level products for hobbyists and those who want to familiarize themselves with a new technology before making the plunge into a more complete product environment. With that said, I’ll try not to get back on my soap box regarding the true cost of “free software.” Customers doing hardcore application development are generally looking for complete solutions . . . not feature light tools or fragmented technology components. Sure, there are thousands of developers out there who would much rather download dozens of open source components, stitch together, and maintain their own development environment rather than ever pay a nickel for a software tool. We will never appease this crowd. Our focus is on developers and development teams who want complete, industrial strength development tools and environments . . . and see the value in the relationship with a vendor like CodeGear.
SDA: Jim, Building partner programs has been one of the CodeGear priorities since its inception. Is there any development or announcements with regards?
Jim Douglas: We’ve made excellent progress expanding our partner network in India over the course of the past couple of months. We recently signed agreements with two additional distributors, SoftCell and Micrographics, extended our relationship with our existing distribution partner, Sonata, and signed an agreement with a new training partner, Pragathi. We are very excited about all of these relationships. Each of them are quality organizations with great track records and will provide us with the market reach necessary to meet our growth objectives in India. Each of them will play a critical role in our success.
SDA: Jim, What strategies have you planned to tap the global market among emerging competition for CodeGear? How has the response for CodeGear tools been globally and specifically in APAC regions?
Jim Douglas: CodeGear has always (back to its early Borland roots) been a very global company. If you look at our revenue mix geographically, it’s fairly evenly distributed between North America, Europe, and Asia. In addition, we have a very strong presence in South America (especially in Brazil). What will be different for us in the future is where growth in Asia comes from. Although we have done business throughout Asia over the years, Japan has been by far our largest market. I expect India and China to be significant growth markets for us over the coming years and become major components of our revenue mix.
SDA: Jim & Ravi: Web 2.0 and even Web 3.0 are much-hyped buzzwords these days. What is Codegear doing to get to that next-generation Web development community?
Jim Douglas: Our most significant push right now is penetration into the PHP and Ruby on Rails markets. We view Ruby on Rails as an important growth market and are very focused on becoming technical and thought leaders in this space. It’s currently a nascent market, but we anticipate it will grow from a quiet “artisan” web designer market into a significant web and enterprise application market. We plan to be part of that evolution in a big way.
SDA: Jim, CodeGear announced recently (Nov 12) that it is holding its second online developers conference -- CodeRage II Virtual Developer Conference, November 26-30. Why do you think a conference such as this, which is aimed at involvement from developers, consultants, students and enthusiasts, will benefit from being a virtual experience rather than a real world one?
Jim Douglas: CodeRage isn’t a replacement for live events. I just gave the keynote at Borcon Brazil 2007 in Sau Paulo two weeks ago. It was an extremely successful event for us and our major partners in Brazil. You will see us conducting live events around the world on an ongoing basis. With that said, the days of huge technical conferences and tradeshows are dwindling. With the ever increasing cost of travel, companies are radically cutting back on employees going to such events. Therefore, we are conducting much more focused live events and complimenting them with virtual developer conferences such that a broader audience has a chance to interact (directly) with CodeGear developers as well as key luminaries from our ecosystem. CodeRage was our pilot virtual endeavor. Based on the overwhelming positive feedback, we have decided to continue hosting virtual events.
SDA: Jim, after you took over from Ben Smith you kept up the tradition of blogging over at the CodeGear blogs. CEOs in most major companies today maintain a blog, especially because it is often the most unadulterated form of receiving user reactions/comments. What are your major takeaways from the blog that you write?
Jim Douglas: First of all, I’m terrible at it! I’m new to blogging and haven’t really found my mojo (rhythm) yet. The most common feedback I get to my blog is . . . why don’t you blog more? Guilty as charged. I really do need to improve in this area. With that said, blogging is a great opportunity to reach out and build relationships with multiple constituencies. Over the past few months, I’ve spent some time reading blogs of other high tech CEO’s. Jonathan Schwartz (Sun Microsystems CEO) is by far the best blogging CEO in my opinion. He does a great job of using his blog to reach out to customers, employees, partners, and analysts. We have a somewhat unique customer base. The relationship between CodeGear and our customers is not like any company I have been part of or seen during my years in the technology sector. The relationship is so tight and the interaction so frequent and widespread, you would swear most of them work for the company. This is an incredible asset that I really didn’t appreciate fully until I was in the job for a period of time. Given this, blogging is not a “nice to do” activity, it’s an absolute customer requirement. It’s very important to them that I’m reachable and visible. In addition to blogging, email is extremely important. You would be surprised at how many emails I get directly from customers. What always entertains me is when they are shocked that, a) I answer their emails directly; b) answer them fairly quickly. I always appreciate customers reaching out to me . . . even when they want to voice frustration or give constructive feedback. |
