Was Siebel the mystery bidder for RightNow Technologies, one of the hottest IPOs of 2004?
By Tom Foremski - December 6, 2004
RightNow Technologies, one of the most successful tech IPO's of this year, seriously considered an acquisition offer from a much larger software company just a few months before announcing its public debut.
The information was revealed in a recent Harvard Business School case study, part of a new course focused on teaching students how to bootstrap companies.
RightNow Technologies offers hosted CRM applications and is closely associated with Salesforce.com, a company with a similar business model, but with the larger and louder, publicity-seeking CEO Marc Benioff.
Greg Gianforte, founder and CEO of RightNow Technologies (based in Bozeman, Montana) told the Harvard Business School that his company received a generous acquisition offer from a large software company in its sector. The offer was such that it would have created more than $100m in wealth for Mr Gianforte, and multiple tens of millions of dollars in wealth for many other investors and executives. The offer was considered in December 2003. RightNow was started with a $5,000 investment by Mr Gianforte. In 1994 he had sold Brightwork Development to McAfee for $10m.
The software company making the bid for RightNow was not identified. However, the description of the bidding company in Harvard Business School case study N2-805-032 indicates it was likely to have come from one of Silicon Valley's largest software companies--Siebel Systems. The case study documents refer to a large, well-established software company in the CRM space, whose software is expensive and requires several years to install.
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Siebel headquarters in Foster City: Mystery bidder for RightNow?
The offer valued the company at a market-leading multiple to revenues but the multiple was not disclosed. The valuation was based on RightNow's revenue run rate of about $50m rather than its trailing 12-month sales of $35m. The bid was all-stock and no cash.
The Harvard study notes that there was extensive deliberation by RightNow board of directors, and discussions with investors. However, Mr Gianforte, the largest shareholder with about 60 per cent of the company, rejected the offer.
The deal was considered counter-culture to that of the company, which had worked since 1997 to pioneer a hosted CRM model. RightNow, along with Salesforce.com and others, have spent many years promoting the idea that traditional enterprise software applications have become inefficient. Their sales pitch is that a hosted IT application model, in which customers pay according to use and the software is hosted elsewhere, is a more economical model. This is sometimes referred to as "web services."
The traditional enterprise software market relies on the sale of software licenses to large companies, which run the software in their own data centers. This procedure can take several years to implement because the new software has to be integrated with legacy applications. In the web services model, companies can start using the IT applications within just a few hours.
The decision to reject the offer paid off handsomely for RightNow staff, and investors. It announced its plans for an IPO in April 2004 and completed it in August, following the Salesforce.com IPO in June.
At the close of trading on Friday December 3, 2004, RightNow (RNOW) closed at $18.68. This is considerably higher than its IPO price of $7 per share and represents a market capitalization of nearly $542m.
Shares in traditional enterprise software companies have lagged considerably over the same period. Siebel reached a 52-week high of $16.19 in early January. It slid to a 52-week low of $6.97 in mid-August and regained some lost ground, closing at $10.38 on Friday, December 3, 2004.
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By Tom Foremski - December 6, 2004 | Permalink
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Comments
Quant Jock on Top 50 Silicon Valley Influencers: Foremski at 28 Beats Tim O'Reilly and Top Journalists
This list has nothing to do with influence but attention. There are many people who I know who are influential.
The best influencials are the one's who are invisible.
Half those guys are idiots on the list. Tom: I wouldn't be proud to be on that list.
Tom Foremski on Plastic Should Be The Darling Of the Global Green Movement
Wayne: Responsible use of plastic will prevent littering and prevent it from harming animals. Plastic is a very inert substance which means it doesn't react with other substances which means it doesn't release its carbon. Sequestering carbon for many thousands of years is a good thing and I feel that plastic has received a bad rap for the wrong reasons.
Wayne on Plastic Should Be The Darling Of the Global Green Movement
Mr. Foremski,
I'm not the best informed scientist concerning plastic, for I am only a high school junior, and it is a very reasonable refutation you have delivered pertaining to carbon emmissons. It would seem better to implement more plastic of some sort, in by creating a material that would stop carbon emmissions, we have reduced carbon pollution and wallah! Problem solved. It would also seem to solve a case scenario with the ammount of trees cut down by allowing an alternative to "
Tom Foremski on 2009: The Year Of The Great Repression
Ka Fung: I can't speak for the author. As for being "too large to fail" then that should qualify for nationalization since it would socialize the profits as well as the losses of such institutions, instead of just the losses.
Ka Fung on 2009: The Year Of The Great Repression
I'm curious what your stand is on the concept that an institution such as a Bank can be "too large to fail." A little disclosure, I think the idea is a little silly.
Great article. I'm curious, though, I don't think the author mentions the $750B stimulus that Obama wants to put into play (some are saying it'll be at least February before they attempt to get it signed now?). Was this an intention (it didn't get signed) or omission?
Tom Foremski on Plastic Should Be The Darling Of the Global Green Movement
Susan: I don't have any investments in anything except this web site. Plastic is very inert, it doesn't react with much at all, which is why it is very good at trapping carbon for thousands of years. Biodegradable plastic returns carbon to the environment very quickly in the form of carbon dioxide. Biodegradable might be better renamed "carbon-returnable."
There is no comparison between the production of plastic and the production of nuclear energy, which is very harmful to the environm
Susan on Plastic Should Be The Darling Of the Global Green Movement
Biodegradable plastic is a good solution but you should really educate yourself on the problems with plastic created from oil, it's effects on human hormones the amount of time it stays around breaking down into smaller and smaller bits. The amount of plastic actually recycled. Plastic is a human horror. the only reason I could imagine anyone making your statements is if they were invested in oil based plastic and blind to reality through human greed. Do you also support nuclear power? Just b
Tom Foremski on Plastic Should Be The Darling Of the Global Green Movement
Mroy: The carbon content of plastic is quite high. Plastic is made from polymers-- long chains of carbon and hydrogen--the basic building blocks of oil.
Plastic can be made from vegetable oils, anything that can provide those carbon-hydrogen chains. Fossil fuel oil is the most easily obtained and it doesn't compete with food supplies.
Mroy on Plastic Should Be The Darling Of the Global Green Movement
Can you please tell me the carbon content of plastic.
Peter on Four Years Later GMail still in Beta . . .
Chrome went out of Beta pretty quick though - didn't that supposedly have to do with Google wanting to package it with PC's, but manufactures not wanting to do so when it is in Beta??
James on Saturday Post: Stemming Deflation When Thrift Is The Answer . . .
If we're going to use drug analogies, what about alcohol? Going cold turkey with alcohol gives you the DT's which can kill. You can't end up healthier by dying in the process.
James on FutureWatch: The End Of The News Aggregators And The Future Of News
This makes complete sense, but isn't it true of much of the high-quality online content AND services we currently get for free? For example, YouTube, or Facebook. Everyone's scratching their heads trying to work out what the business model for these services is - why they're worth the massive prices paid for them. YouTube and advertising don't sit well together, Facebook has already struggled with its attempts to mine its customer base for marketing purposes. The answer is subscriptions,
Barry on Searching for search on the iPhone - where is it?
Here's another missing item that's part of Blackberry but, sadly, missing from iPhone: Telephone number recognition. No matter where there's a phone number entered on a Blackberry (contacts, contact notes, notes, calendar - literally anywhere) the Blackberry recognizes that it's a phone number, underlines it and lets you call with the push of a button. That beats going to my iPhone calendar, memorizing my next appointment's number, exiting calendar, entering phone, calling up the dial pad and
Darryl on Shrinking Mass Media Masses At Googleplex
Tom - I agree with you on the severity of the issue of misinformation and the problem that the current business models, offline and online, do not support professional journalism. It is surprising to me that I find few people who share this concern or line of thinking.
It seems to me that the lack of a supportive business model is the result of the temporary situation we have found ourselves in these last 10 years or so with the expectation that content on the internet will be free an
Tom Foremski on Saturday Post: Stemming Deflation When Thrift Is The Answer . . .
Rob: Exactly. That's why were are doomed to a long, drawn out, recession. It's always better to go "cold turkey." As a former nicotine fiend I know that quitting through small amounts of nicotine in the form of gums or patches was always much more painful and difficult than the short, sharp, shock of the reality of life without nicotine. We need to get off of the addiction to inflated asset prices, and we shouldn't prop them up. Of course, easier said than done. As a nicotine addict I always
Rob Hudson on Saturday Post: Stemming Deflation When Thrift Is The Answer . . .
But what if writing things down to market value is too painful? Politicians have to stay in power, after all?
Rob
stevem on Searching for search on the iPhone - where is it?
There's actually a wonderful search app: unfortunately you'll have to jailbreak the phone to get it. It's called 'search' (strangely enough...) and is available through the Cydia installer.
C'mon, even the other Steve has a jailbroken iPhone...
Title Insurance Nicaragua on The State Of VC Funding In Southern California
It would be nice to see some of your commentary, even if you weren't able to go. I have a friend who is involved in the bay area and it sounds like things are tight as one would expect but for some reason he doesn't seem too sad about it; apparently everything with the title of president, it's ok even if the future is unknown. Sam, Nicaragua.
Kevin McKinney on Plastic Should Be The Darling Of the Global Green Movement
Your basic point--that interment of plastic in landfills is the only currently-functioning "re-sequestration" program--has some validity, but your analysis is woefully incomplete, given that upwards of 90% of plastic is made from oil, and manufactured through an energy- (and thus, emissions-) intensive process.
And yes, bio-degradable litter *is* less of a problem. See this account:
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Tom Foremski on Let's Take A Lesson From The Chip Industry: Turn The Big 3 Auto Makers Into Car Foundries . . .
Thanks Carol. Coming from you that's a seriously great compliment. I don't know how to get it in front of anybody, I'm hoping that if you have a better mouse trap the world will beat a path to your door :-)