In January 2000, when Jeff Papows announced that he was resigning from his high-profile position as CEO of IBM subsidiary Lotus Development , he was one of the most-watched CEOs in the IT industry. Now, he works out of a nondescript business center in Burlington, Mass., as president and CEO of Maptuit, a start-up that makes route optimization software for the trucking industry. In a candid interview with Computerworld, Papows discussed his reasons for the switch and his calculated strategy for ensuring Maptuit reaches its destination.
Q: What has the culture shock of the change been like?Day to day, in terms of the way your time gets spent, it's very different. I probably spent 30 percent of my time at Lotus communicating with the organization. When you're motivating an organization of 10,000 people, you spend an enormous amount of time ensuring that what you casually said to somebody in the men's room doesn't become an organizational manifesto for 300 people down the hall because you happened to sort of make conversation.
Q: Has it been a blow to your ego in any way?I guess on the odd day, if I'm real honest with myself, there are some leverage points that I miss. But I don't think I was ever as tied up in that end of it as a lot of people get. I mean, there were a lot of things I had that allowed me to do a job--I had an IBM company jet and I'd spend 200 days a year in the air. But I spent those 200 days working my ass off closing business.
Q: What do you miss the most?
I miss competing with Microsoft or one central, competitive figure that you can get out of bed every morning [to challenge]. I loved competing with Microsoft. Everybody makes all these disparaging comments about Gates and the company and the monopoly and all that other stuff. You know, the greatest goddamn thing that ever happened to Lotus Notes was Microsoft Exchange. Because the rate of innovation and the competitive zeal that [Lotus had] would have never been there in anywhere near the same texture if it hadn't been for Microsoft.
Q: What was your relationship with Microsoft really like?In my case, the way to win with your enemy was to get them very close to you and integrate everything you did with them. I remember when I came out with a Domino server that would run an Exchange client. Everybody thought I was a flaming lunatic. I had people at IBM calling me everything from a goat to a heretic. It was the smartest damn thing I ever did. At the end of the day, the better product won and we sold more Notes clients after that than we did before. But I never made people make a permanent choice that they didn't want to make. We moved a lot of the pricing to the server, and we were better off anyway.
Q: What's your relationship with IBM like now?There's been so many instances in this industry where high-profile executives leave a company, and there's all this bad blood, and they run out with the biggest parachute they can get -- particularly now with all the insanity with Enron and all this stuff. I have to say, my relationship with IBM at every level, from [CEO] Lou [Gerstner] to the software group to [former vice chairman] John Thompson to the sales force, was spectacular. And it was as spectacular the day I left as it was the day I became CEO when Jim [Manzi] left the company 30 days after the acquisition.
Q: So why did you leave?
I basically worked myself out of a job. I mean, at that point Lotus had 60 percent of the market share. And you know what it's like to install Notes or Exchange--once it's in, it ain't coming out; the switching costs are way too high. So the war was over, and Lotus had squeaked out a narrow victory. And it was a cash cow. At that point they needed a general manager; they didn't need a CEO.
If I had just wanted to stay there and make a lot of money, I could have coasted. I had very predictable revenue streams, because probably about 45 percent of the product revenue in any quarter was the existing customer base furthering deployment. But I'd also made a ton of money, and I wasn't motivated in the way that I think a lot of people are characteristically motivated. I decided I'd start with something very early-stage, where I could take a clean sheet of paper and design it from the ground up and see if I could make it fly.
Q: What on earth attracted you to Maptuit?I took a look at it really only because it was a recurring, subscription-based pricing [model]. Having spent way too many Maalox moments at Lotus and other places like Cullinet [Software Inc., where he held a series of senior executive positions] and Cognos [Inc,. where he was president and chief operating officer]--trying to do the last couple hundred million dollars of revenue in the last couple days of the quarter, shooting elephants, I was really interested in that.
Q: Maptuit was founded in 1999 as a consumer-facing mapping service. You came in a year later and turned everything upside down. Why?With a little bit of help from IBM, I did some primary market research and concluded that you could take the same base technology, which was this incredibly rich, geospatial model of the road network in North America, and easily point it in a different direction. There's a bunch of publicly available data for the road network, and any idiot can license it. But what Maptuit had was four or five rocket scientists--literally out of the aerospace industry--that really understood the technical algorithms to aggregate all that public and private data into optimal routes.
That's much more of a Jeff Papows-like business-to-business model; and it just took me a while to twist the company and the technology into a place where my experience was useful. Then I went to Qualcomm [Inc.] and got them to really investigate the technology; and about two months ago they began reselling the product directly--which for an early-stage company is a huge win.
Q: Earlier this month you got US$6 million in third-round venture funding, which is pretty difficult to do in the current business climate. How did you manage that?I think that was a byproduct of having taken an uncharacteristically mature, fanatically detailed look at picking a market segment that was unfragmented, underserved, where the ROI of the technology was brain-dead obvious.
Q: Are you going to defy the odds and go for an initial public offering?I think it's less likely that the company will ever go public than it is that the company will be acquired. When I was looking at market segments, I deliberately picked a segment where I thought there would be as many prospective acquisitive partners as not.
And remember: I not only managed the IBM-Lotus merger and made that successful, I sold Cullinet to [Computer Associates International Inc.]. I've got a lot of experience with this, and I can tell you there is lots of room to make tons of money in a leveraged way if you're the acquired side of an acquisition. Lotus was a perfect example -- I made a lot of money when IBM bought the company; I made five times that in IBM stock working there.
So let's say, much like Iris [Associates, the company founded by Ray Ozzie that created Notes and was subsequently acquired by Lotus] was an inside gem to Lotus, Qualcomm or whoever decides that Maptuit is an asset that they really want to control, and we become an acquisition candidate for a Qualcomm or whatever--pick your fanciful representation. That's a scenario where I've got more experience than anybody on the planet making those things work.