by Tom Foremski for SiliconValleyWatcher

It’s the Fifth Floor and Greg is buying dinner. And why not? I haven’t seen a paycheck since June 2004 and he is CEO of Silicon Valley’s top performing IPO of 2004 (and it’s not Google or Salesforce.com…)

My good friend Annie Kim is with us, and Greg is telling me about living in Montana. “It’s a wonderful place, I love living there, even though I was born in California. I love the hunting, and we eat what we kill,” he says. Well, you might be eating Siebel Systems soon, I think to myself …



But, I’m getting ahead of myself, let me introduce Greg Gianforte, CEO and founder of RightNow Technologies.

His is a web services enterprise software company, and although it is focused on CRM, it is quickly assembling a full suite of ERP capabilities (you’ll be fine Marc … no reason to worry … keep swimming with the dolphins …)

Greg is a serial entrepreneur -- this is his fifth venture and he has made a ton of money. “I started this company with just $19k,” he says. (RightNow [RNOW] has a market cap of about $370m).

Well, hold on Greg, I say, you had a few $mn in the bank from selling your previous company, it's not as if that’s all you had in your back pocket …

Well, you’re right, I didn’t count my salary for the first year, he concedes. But I know how to start companies with very little money and that is a skill not being taught in today’s business schools.

It’s true, and Greg is working to change that. He has been working with a Harvard professor who is teaching entrepreneurial startup methods. He chose Greg’s company as a case study. And an interesting case study it is. This is where we broke the news that Siebel tried to acquire RightNow in December 2003. In the case study, Greg steps through his thought process in deciding whether to accept a “generous” stock offer from an unnamed company that bears a striking description to that of Siebel.

(See SiliconValleyWatcher.com: "Was Siebel the mystery bidder for RightNow Technologies?")

I can’t believe you would have accepted that offer, I say to Greg. Or even considered it seriously for more than one microsecond . . .your company culture abhors enterprise software as we know it . . .

Greg grins but won’t bite. He says that he was at Harvard recently giving a talk to MBA students and they were asked whether RightNow should have sold out to the unnamed company. All but one of about 80 students said they would have sold the company.

By not selling, RightNow went ahead with its IPO in August 2004 and has racked up a stellar performance. The alternative would have been holding Siebel stock, which is not stellar.

(Interestingly, VMware, the other hot software startup at the time, sold out to EMC, at about the same time RightNow was considering its buyout. VMware got cash, but, it would have done far better if it had waited and IPO’d, IMHO...)

Greg started RightNow the smart way and the hard way. He hit the phone and called as many IT people as he could persuade to talk with him. For months, he sounded them out on what type of applications they needed and then, would they buy a web services CRM application with key features?

Then he went ahead and pre-sold the software licenses and only then did he move ahead and develop the product. This is a textbook case study in launching a new venture with very little risk: Find out who is your market, then figure out what is the need, then pre-sell the product. Perfect.

(If I only I had a dime for every startup story I've heard of geeks burrowing away in stealth mode only to emerge 18 months later and find no market for their product...)

This is one characteristic of what we have been calling the “NewRules Enterprise.” You are in communication with your customers and you know exactly what they need and what they will buy and how much they will pay for it. Perfect match between market and product.

Today, the NRE (yup, we're coining the acronym) would employ blogging technologies to reach and communicate with its customer base--that’s the only difference between what Greg did in 1997 and today, 2005, the Year of the Rooster (Blogger.)

SiliconValleyWatch.com: "These are the new dotcoms of the new rules economy..."

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