Podcast: How Does Wall Street View Your Public Company? An Interview with Roger Sippl of Informix

By Ryan Tansom
Published: July 5, 2018 | Last updated: March 21, 2024
Key Takeaways

Take it from someone who went through three IPOs: There’s a lot involved in how you value a company, and some unique considerations you need to make if you’re taking a company public.



About the Host

Ryan is an entrepreneur, podcast host of the show Life After Business and the co-owner of Solidity Financial. Having personally experienced the hazards of selling a business, he joined up with his friend Brandon Wood to educate others on the process. Through their business (Solidity Financial), they provide a platform for entrepreneurs called Growth and Exit Planning that helps in exit planning, value building and financial management.

About the Guest

Roger Sippl is a Silicon Valley software pioneer, entrepreneur, and innovator. His 30 years of contributions have helped shape the enterprise software technology landscape of today. In 1980 he founded Informix Software, and was CEO for 10 years, taking it public in 1986. Under his leadership, Informix pioneered SQL relational databases, report generators, screen data entry packages, 4GL application development tools, and scalable OLTP database technology. It is now a part of IBM, after peaking at a $4B market cap as a public company.


Sippl was also co-founder and Chairman of The Vantive Corporation. Vantive became a leader in CRM, became a public company, peaked at a $1B market cap, and is now a part of PeopleSoft/Oracle. In 1993, he founded and was CEO of Visigenic Software, helping pioneer distributed object computing and the concept of the application server (based on CORBA, prior to the J2EE standard) in enterprises. Visigenic was acquired by Borland, after becoming a public company. After the Visigenic IPO Mr. Sippl earned the “Golden Hat Trick Award” from Cristina Morgan at JP Morgan/Hambrecht and Quist for three Silicon Valley IPOs.

In the mid-nineties, Sippl became a founding partner of Sippl Macdonald Ventures. He invested in several successful software companies, including Illustra (acquired by Informix), Broadvision (IPO), SupportSoft (IPO) and Red Pepper (acquired by PeopleSoft). In 2002, Sippl founded Above All Software, a composite application platform that used web services and service-oriented architecture (SOA).

Mr. Sippl has been on over a dozen boards of directors of for=profit corporations, public and private, and has also served on several non-profit boards. Public board service has included Informix, Vantive, SupportSoft, and Interwoven. He was the representative of the software industry on the X/OPEN board of directors and was a founding board member of /usr/group and the Uniform Unix trade association in the 1980’s. Mr. Sippl has also been the Chairman of the Stanford Cancer Council for over 10 years, as well as serving three school boards over the years. He currently serves on the boards of WaveMaker (private), Demand Reports (private), Filtini (private), and Sensitini (private), as well as Fountain Valley School of Colorado Springs.


Mr. Sippl studied Biochemistry, Immunology and Computer Science at the University of California at Berkeley, earning a BS degree in Computer Science in 1977.

If you listen, you will learn:

  • Roger’s business background.
  • The cancer diagnosis and how it changed his life.
  • Why Roger switched to the software business.
  • His goals for the company in the early days.
  • Why Informix became a public company.
  • What it was like running a public company.
  • Why Roger left Informix.
  • How the software industry has changed over the years.
  • What Roger considers when looking to invest in a company.
  • The common red flags Roger sees when he evaluates a business.
  • Roger’s parting advice for the audience.

Full Transcript

Announcer: Welcome to Life After Business, the podcast where your host, Ryan Tansom, brings you all the information you need to exit your company and explore what life can be like on the other side.

Ryan Tansom: Hey there and welcome back to the Life After Business podcast. This is episode 100. I can't believe I've been doing this for 100 weeks in a row, but I'll tell you what: I've met some of the most amazing people with amazing stories and I'm super happy that people decide to put it all out there. Come on the show and share their story and today's guest, Roger Sippl, has quite a story. He got diagnosed with cancer when he was in college and had to battle through Leukemia and was able to prevail only to see life differently because he was excited to be young, excited to have life, and he looked at risk a lot differently because he was alive. And what he did is he took his idea of a database management software that he was able to create and then sell over and over and over again for profit instead of the hardware race. That was going on with apple and Microsoft and Silicon Valley when it was originally getting his name. He realized that he would rather build something once and then sell it multiple times. Well, lo and behold, there was lots of struggles along the way and Roger shares his story about taking that company public, a couple of other companies that he ended up taking public and how he was able to look at business differently from the eyes of Wall Street and what it means to have business value and potential business value. During the interview, Roger explains his fundamentals of business and how you have to look at growth and profitability, what it's like to look at businesses from the eyes of an investor or Wall Street, and then how he was able to make his decisions for companies that he was investing in after he took those three companies public. So without further ado, I really hope you enjoy this interview with Roger.

Announcer: This episode of Life After Business is sponsored by GEXP collaborative. Their proven process gives you clarity on all of your exit options and how those options impact your financial success, timing and future happiness. Sell your company on your time frame to the buyer of your choice at the price you want.

Ryan Tansom: Good morning, Roger, how you doing?

Roger Sippl: I'm doing great today. How are you doing?

Ryan Tansom: I'm doing good. I'm uh, I'm excited to have you on the show. You've got quite the track record and uh, we were introduced by a mutual friend that worked for you a long time ago and there's so many different ways we can go because of the different journeys and different ventures you've had and been a part of. But for the listeners that don't know a bunch about your background, maybe you know, take us back to when you decided to become an entrepreneur or didn't and how you ended up getting into it for your first venture.

Roger Sippl: Well, I'm actually, I was 15 or 16 years old and a friend and I started a life guarding and swimming instruction company. In Orange County they were building out these homeowners associations with 5-600 homes in each neighborhood and they had to do swimming instruction and lifeguard and they didn't know how to do it. So we'd, we'd offer that and we had an insurance policy, believe it or not, and that was, that was our big sales. You don't hire us, you're uninsured. To get an insurance policy, you've got to hire your own life guards and you don't know how to live or lifeguards. And so we were water safety instructors from the Red Cross. And so we, uh, okay, ostensibly knew how to do that. We're trained to be lifeguards and swimming instructors. So that grew to be like 23, 24 employees. I mean it wasn't a small little thing, wasn't the junior achievement company, which I'm not knocking junior achievement. It's a great thing for people to do. But I remember at graduation and high school, and this was when the whole budget for, for college freshman year was $3,000, right? This, uh, this uh, young woman got a thousand dollars scholarship from Bank of America for running a junior achievement company that grossed $224. And I'm thinking, wait a second, we did like four grand.

Roger Sippl: So, uh, anyway, that. So it was clearly kind of in my blood. But, uh, curiously then I went to college and I wanted to be a doctor and I think it was still the independence that, that attracted me too, that once I got that qualification, that certification, I could kind of hang out my own shingle and I could make my own hours. Yeah. I could kind of not have a boss. Not that I was, you know, that opposed to having bosses. I had had a lot of jobs in my youth and I didn't mind having bosses, but it's just that ability to uh, you know, make money with your own business so that you're in control, you know, it, it, it just removed a lot of randomness from my life. So. So that was my goal. But then when I transferred from UC Irvine, UC Berkeley, I got diagnosed with Hodgkin's lymphoma and I only had a, what appeared to be about a 20 percent chance of living. So it kinda, it kinda put a stick in the spokes of that bicycle ride. I decided to switch majors to computer science because they had gotten some indications from some medical school board friends that I wasn't going to get in. No one wanted someone to die on him in medical school. So they, I mean, they just wanted to give the seat to somebody who had a better chance of getting through these people told me, well, you know, why don't you just go get a master's degree, you know, get a job or you know, buy a car, date a girl, go to the movies, do something for a couple years after you graduate. And uh, then if you, if you haven't relapsed then you'd been applied. But you know, your numbers right now at look a good a couple of years from now if you relapse free, you know, the numbers would be a lot different. So anyway, that's what I…

Ryan Tansom: That's motivating, my gosh!

Roger Sippl: I don't know if any of that is a legal anymore. It was a long time ago. It was the 70s, it was before the decision.

Ryan Tansom: So how did you keep your motivation when you were going through all that stuff?

Roger Sippl: Well you know, the whole thing about having cancer for me, I mean different people react to it differently. But for me it was a, you know, here's a life and death fight, you know, and I'm to fight. Uh, I was a premed and I had taken bio chemistry and organic chemistry and general chemistry, you know, I knew a lot about biology and cell biology and so I really dug into what Hodgkin's disease was and studied up on it. I found the guy who wrote the textbook and was working on the cure and he was at Stanford. I bought his book and started reading it and got into his clinic and he treated me. He and his staff of like 40 or 50 doctors that they had the world's best treatment center. Was just a 40 minute drive down the road from Berkeley was just a miracle. Remarkable coincident. [Ryan interjects: Wow.] So what happened, I think was over the next several years as I switched to computer science because I knew I could get a job doing that. Okay. I knew I could write computer programs. I knew that that paid. I discovered that databases weren't very mature yet. And actually application development for simple applications like payroll or inventory or whatever. It just wasn't done very well yet, and so this business of surviving cancer and building better software products and better software development tools and starting a company and it all became sort of a life or death thing. So those three fingers graduating from college actually successfully graduating. Well, my scholarships ran out because I did a fifth year because of the switch of majors, so my fourth and fifth year was all about computer science, but I had to work full time that fifth year, so I almost flunked out or trying to hold down a full time job and major in computer science from UC Berkeley.

Roger Sippl: But I succeeded, but I had nightmares for years later and now I'm starting to wonder if there was some form of PTSD or something like that because the radiation therapy, you know, it was four months long and there was a major surgery in the middle of it. And then I had seven months of chemotherapy and that was the harsh chemotherapy back in the day. And the anti-nausea agents weren't very good. So, uh, you know, I won't go into the details. I don't want your listeners all hang up, but the 13 months of, uh, you know, if you think about it, a prisoner of war, you know, you think you're going to die. And so yeah, that I thought it was going to die and you're getting tortured every day. And I was getting tortured ever day. Pretty much the same thing.

Ryan Tansom: Trying to graduate high school – well, college.

Roger Sippl: Yeah I was trying to get my graduate degree. But, but, um, you know, I was learning so much and it was just so exciting to be young frankly. And I was, I wasn't relapsing. I got through the treatment and in a year went by another year went by and, and all of a sudden I thought my God, I've got a chance and so I wasn't going to waste that. I was very busy during those few years and I just stayed very busy. And so whether it was trying to keep the company afloat, you know, while I was putting in payroll on my visa and trying to build our first database product and you know, having a few loyal friends that I hired early on doing whatever it took to try to get this product out when we had no, no investors because no one would invest in me because I was 24 when I started this company back then that was considered too young. Nowadays, it's no big deal, but everything became a life and death matter for me, which I'm not sure, but it's a good thing. But a lot of people attribute my success as an entrepreneur to the, uh, you know, take no prisoners, this is… We're going to succeed or die trying approach.

Ryan Tansom: With staring death in the face, I mean, you've probably got a little bit different perspective of risk than everybody else.

Roger Sippl: Yeah, well not a whole lot intimidated me.

Ryan Tansom: Here, I'll take out a 30-year loan. Give it to me.

Roger Sippl: Yeah, well I play poker sometimes now, poker tournaments, and you know when people try to bluff me – I'm usually the oldest guy at the table these days – and I'm thinking, if you had any idea how useless it is to tried to intimidate me… haha.

Ryan Tansom: Maybe for the listeners that don't know a ton about databases, what was the, what was the business, and then what were you trying to accomplish when you said, you know, database management. I know a lot of the couple of other ventures all kind of stemmed through some very experienced, but, you know, what were you trying to solve? And then did you start with a plan in the end in mind because you, I mean, your exits are all very similar on the first three companies.

Roger Sippl: Uh, yeah. Uh, that's a good question. Well, there were some software products being sold by companies and I think the first software company to go public with a database management system, software company, Colinette. But uh, you know, all these database systems were originally written for very large mainframe computers and in the seventies there was a new thing. It was a mini computer and instead of a computer cost, 5 million computers sold for 100,000, 200,000, 300,000. And then there was a new breed of computers coming out that were multiuser computers but only sold for tens of thousands. And so I, I wrote a simpler database management system that was easier for people to use and ran a well on the smaller machine and that was the target. There was a new operating system called the Unix operating system, which I targeted my product for that operating system and it was as much about promoting the Unix operating system as it was about promoting our flavor of database management system.

Roger Sippl: But it was after I designed it, I discovered, uh, other people have designed a similar sort of system and it was called the relational data model, that relational database management system. And that was the basis for other companies like Oracle, sybase Ingris, and you know, all those companies did well. We all went public. Oracle went public three years before Informix did. Informix was my company. Yeah. And uh, they, they started three years before we did. Um, I'm sorry, they only made public maybe about a year before we did, but they started three years before we did. And we've doubled in size every year. So, you know, we'd go from 50 employees to 100 employees, but they were going from you know 300 employees to 600 employees, you know, so we're always one eighth their size. Uh, so, um, because of the three years of doubling they got to do before, before we got going. So, uh, that, that was always our battle, how to survive in the shadow of Oracle and uh, you know, that companies, huge day, Larry Ellison is the richest man in California, so I, I kinda came in second in a field of a lot of competitors, but they were so much bigger the whole time.

Ryan Tansom: What was the goal? I mean, did you, think that going public was… was that your intentions or you know, what was going, was there a lot of mergers and acquisitions going on at the same time? What was the landscape and what were you guys marching towards everyday?

Roger Sippl: Yeah, well, like, like most entrepreneurs and you know, um, I criticize people for this now, but I didn't have a great plan when I started it. What, what, what I, what I knew is this, I knew that writing computer programs from scratch, from specifications that, you know, I worked at Bechtel engineering as a contract program or was it finishing my bachelor's degree at Berkeley and you know, I got paid for $6 an hour, then $9 an hour, $12 an hour, then $23 an hour once they figured out that was like one of the few people around that could do the project that they really needed done. And I thought well $23 an hour is great! Back then that was a lot of money. But this database management system that I purchased on behalf of Bechtel from Hewlett Packard to go with their mini computer, you know, they paid $10,000 for this piece of software. And so these guys at Hewlett Packard wrote this software product one and now they're selling a $10,000 a pop. So they're making money. That software group at Hewlett Packard is making money, not based on how many hours they work. It's based on how many of these reels of tape they can sell. And the real estate only cost me like $12 and they're selling it for 10 grand. So that profit margin appealed to me.

Ryan Tansom: Ding, ding, ding, ding.

Roger Sippl: Right, so I'm thinking, well I could write a database management system for one of these smaller computers. Uh, and there were a lot of companies popping up in Silicon Valley to build these smaller, uh, microcomputers the MPC had, was coming out and they were microcomputers before that from, from smaller companies than IBM. And these were called super microcomputers because you could have eight users or 20 users using the same computer. Now we call them servers. But there were a lot of companies like dozens coming out with computers that would run the UNIX operating system, but they had no software at all. So it's, it made the opportunity available for companies to build software products to run on these Unix-based computers. Whereas Hewlett Packard had their computer, they had their own operating system, not Unix. They had their own database management system. So I thought, well, if I could build a database management system that could run across lots of different brands of computers and sell them for thousands of dollars a copy, then shoot, all we have to do is sell enough per year, like maybe 100 of them or something in a year and we can break even. And then the next year we sell 200 of them, we're making all kinds of money! So it was the profit leverage that attracted me to the business opportunity. I didn't have time to think it through in terms of, you know, how much cash will it take to hire the people to build the product that shifts the version one before we, you know, and then invoice people and then 30, 60, 90 days before we get paid. Yeah. Yeah. I had no idea how to analyze cash flow. And so I got my former girlfriend, I had broken up with her to invest $20,000 in the company for 10 percent of the company. And I thought, well that should do it. Didn't come anywhere close. But miraculously, uh, over the, over the three or four years, they're well as building the product. We only had to raise like $340,000 total, but it was a lot more than 20 and, and you know, that stock got so very inexpensive and so those people that, the angel investors that got me going, which was an enormous risk to them, so they deserve a 100 fold or whatever they got, but they got an enormous multiple return on that investment. But, you know, uh, it was, it was really building that company brick by brick, literally putting payroll on my visa, had gone to sleep every night thinking we're going to be broke by the morning.

Ryan Tansom: I'm curious, Roger. I was coming out right where Basic was coming out where Gates and all those guys are… Everybody's kinda got the software hardware battle going on. And correct me if I'm wrong, isn't that somewhere around those times?

Roger Sippl: Yeah it absolutely was. It was the fire in the software industry days. But, you know, Microsoft succeeded for the same reason that all of a sudden there were these microcomputers and the companies, the hardware companies building the microcomputers usually didn't build much software to go with them. So, uh, you had, uh, you know, then in Microsoft's case they had IBM building the PC and then compact came out with a clone and a lot of other companies came out with a PC clones, PC compatibles, and they had lots of hardware manufacturers building platforms for software products that the hardware companies were not providing. So, you know, it's kinda like literally someone inventing the printing press and you happen to know how to write books. I mean the guy who invented the printing press or people that build printing presses that doesn't guarantee that it's going to be any books, right?

Roger Sippl: All of a sudden, you know, there were several companies and Microsoft, Informix and Oracle that could build software. And they were, you know, computers being sold that had no software on them. So it was an opportunity to create an industry really is what the exciting part of it was. Because prior to that, uh, IBM sold the computer and IBM sold the software and took an anti-trust decree to get it so that IBM had to allow other software companies that sell software for IBM computers. But with a digital equipment and Hewlett Packard and data general, all these mini computer companies and they all sold their own software as well. So the pattern was continuing and there wasn't an opportunity for much of an independent software industry until you had generic operating systems like ms dos and then windows, multiuser computers, the UNIX operating system. And it was that opportunity, uh, of the generic operating system that ran across dozens of brands of computers. That's what created the software industry. And that was the opportunity I bought. It actually wasn't as much the opportunity of a better database system or you know, programming and the c programming language or, or the technical aspects of the unit. It was the fact that it was an operating system that was going to run across lots of different brands of computers and the, and the creation of the generic software industry.

Ryan Tansom: Some of these books, I don't know if you ever heard of The Innovators book and then you know, the jobs and a couple of these documentaries. That whole space is just crazy to think that you're right in the running mix with all these people in, as you're watching all these companies go public, is that how you decided to go that route or was it something that like, you know, what led you to that direction and how just kind of, what was the process like?

Roger Sippl: Right. That seemed like a miracle to me. I mean, after we shipped the product and we're starting to have some revenue and uh, very quickly that the product was, know the whole strategy was quite successful, quite correct. All of a sudden we were positive cash flow and growing really fast. Then that begs the question, how can I finally get some money out of this? Because I was broke when I started it.

Roger Sippl: Uh, and really I'm starving, I was just starving for some cash. So I am looked at different types of exits and there were some software company's getting acquired and I was just hoping to God some public software company would want to buy a database company that's open ASK or something like that. Some company that was started even before that was a couple of three years ahead of us that had gone public and had a, a lot of revenue and profits. I was just hoping they'd buy us for gender something million dollars, $20,000,000. And then we, then we doubled in size again and we actually did get an offer from three com for 10 to 13 million, somewhere in that range. And you know, I had one guy on my board who is savvy enough to say, no, this company's worth more than that. You know, your revenues are $5 million going to $10,000,000. No way we're going to sell this company for one x next year's revenue. Uh, and so I, you know, I, I had no idea about how to use metrics like multiples of revenue or multiples of earnings. So I just took his word for it and we're cash flow positive. So I wasn't scared of going broke anymore. And, and I really saw the opportunity of, I mean it was all working. I mean, when you have a plan and the plan starts working, you get a lot braver.

Ryan Tansom: It's not life or death anymore. Now it's just like, what's the plan?

Roger Sippl: Yeah, yeah. Fear melts away and greed takes over. I mean, you know, it's just one of those two forces either fear or greed that drives pretty much everything. And so, uh, we started getting greedy and I just thought we were going to sell for a bigger number. I was thinking maybe we could sell for $30 million, but then and investment banker came by and it would, you know, watch oracle go public and, and it just taken adobe public or was in the process of doing that. And really these were, there weren't that many public software companies. So it wasn't like I was watching dozens of software companies go public, there were only a handful. And she wanted to take us public, um, right after a adobe. So we were doing $20 million on our way to 40 when that happened. And you know, it doesn't sound like much money now. Back then, that was quite a bit in software companies. Companies in general went public when they're a bit smaller than they do now. Those are the Sarbanes Oxley and all this other stuff makes it so you really have to be kind of $100,000,000 company to go public now, but. And 20 million back then. Yeah, that would be about 50 or $60,000,000 company today.

Ryan Tansom: And you were making money which is different than a lot of companies say to you.

Roger Sippl: I think we had 10 consecutive quarters of profit and growth is just unheard of, but it was still a small company to go public and so we did a small initial public offering in September of '86 I think it was. And then I think it was February of the next year or so. There wasn't long afterwards. We did a second public offering. It's like over twice the value.

Ryan Tansom: Wow. So what do you learn to that process that took you and accelerate you in the rest of your journey? Because I mean I know we don't have enough time on the, on the show to talk about like every single facet of this, but what were some of the big takeaways that you learned that. What was it like working for a public company? Because you had mentioned that you said you wanted the control and the freedom and less randomness, but now we are owned by the public and where everybody's got an opinion. So like what was that like in that process and then how did it change after the fact?

Roger Sippl: Well, with regard to Informix, which was my first, you know, it was a little bit terrifying because it was a game. I didn't know I was unfamiliar with it. Now it's still young. I was 30, you're still at 24 when I started the company has 31. I took it public and you know, I didn't understand it very well with the Wall Street analysts job was what games they played and how they've tried to freak you out and figure out whether, you know, call you and try to figure out whether you're having a good quarter, bad quarter and, and then sometimes they would just write that you were having a bad quarter. You know, they'd put out an analyst's report predicting, you know, putting out a sell on you and predicting some, you know, because the product aren't selling as well or people aren't signing up for their next year maintenance contracts or whatever. They just make stuff up. I couldn't believe what was going on in and a lot of these analysts kept telling me that, you know, you're, you're too small. Oracle's too big. You've got to start doing a lot of acquisitions. You got to catch up inside. Which I don't think was ever actually true. We always competed with them. Well just by having great products and great killer and we could have done that forever. But yeah, it's sort of flinched. I sort of a yeah, I listened to too much of this nonsense.

Roger Sippl: Yeah. That's the stock price would go up and down. Totally independent of things that I did and I, I did not like that. The other thing I didn't like was when I did try to liquidate there were these lawyers that would sue you if your stock fell after you sold, whether… accused you of fraud, accuse you of knowing that your stock was going to fall and it's very hard to defend yourself and they would just, they were called strike suits. They were nuisance suits. They were, they had no basis and usually the insurance company would pay them off and so that was a very unsettling experience to get sued for absolutely nothing. Then they have to go through a big defense process. But uh, you know, after I survived all that and uh, worked my way out of Informix, I hired a CEO and then I stayed on as chairman for a few years and then finally I left because I was getting too many business plans in the mail. A lot of people had, a lot of companies they wanted me to invest in, sit on their board and, and they were just opportunities all over the place. Every manual process needed a software product automated, you know, there wasn't just a payroll and inventory anymore. It was everything, you know, customer support, sales automation, marketing automation. So everything in business did pretty much needed to software product. So, um, my VP of engineering wants to start a company, so I gave him some money, helped him with his ideas and we started Vantive Software, which was one of the first customer relationship management software products. And then while I was chairman of that company, I started a company called VistaGenics software, which I didn't do well at first. We kind of had a misdirection in our initial products, but then we acquired a company that had what became one of the first application servers. And uh, we, we pioneered the three tier computing model, which is a massively dominant today, every major web application as an application server in it. So, uh, that, that was all exciting stuff. I mean, I was just the wild west. I mean never met. I never knew when it was going to stop, you know, when, when are you going to turn around and all the problems that need to be solved with software have been solved. Yeah. And there are no more entrepreneurial opportunities in enterprise software, you know, uh, so I, I never knew when the merry go round would stop spinning and there were no more brass rings in the grass, so he just kept going. He just kept starting companies and invested in companies and no running after it with your hair on fire.

Ryan Tansom: So what was it like with Informix? Because I think in software a lot of entrepreneurs where they look at their businesses, their babies because they create it and then there's a reflection of themselves and know from really big, you know, huge conglomerates, all the way down to the small shop kind of entrepreneurs have that same kind of feel and the software, I do believe that it's even slightly different because code and what you're building is literally like an, like a piece of artwork. Was it tough going through that with informatics and then how did your perception of that changed with some of the other ventures?

Roger Sippl: Yeah, well it was kind of my baby. And you're right, I mean it's the authorship. I mean, I did creative writing now. I mean, I write poetry books, I write, I'm working on a novel, a screenplay and stuff and when you write these things and uh, you know, it's your baby, you go to a workshop and other people read it and they tell you what they think about it and sometimes they didn't understand it. They didn't like it the way and the best part they didn't like and you know.

Ryan Tansom: Yeah.

Roger Sippl: Yeah. So it is kind of your baby and it was the same way with software and it was an artistic activity. Especially the code I wrote. I wrote a lot of comments. I wrote a very highly stylized form of the c programming language and it's very clear when other people read it and know other programmers and I know write code that way. They don't really care about. The next guy comes along and tries to read it, but you know, it was, I was there 13 years so it, it wore off a mostly. I mean I still consider my baby. I still remember it very fondly, but the product itself, you know, the engineers, the really great engineers I hired later, I said, well, you know, this part of the code is still doing this, you know, but, but I, but when I do this, it's under that. And they go, well, we, we rewrote that code long time ago and I go, you re-wrote my code, what are you talking about?! [laughter].

Roger Sippl: Oh, you know, that was like year four or five. Uh, I was still very proud of products we invented and types of products, you know, we invented languages. So not only did we use programming languages, but we invented query languages, report writing languages, fourth generation languages to create a new software. So I'm still very proud of the fact that not only did I use language, but I invented language and that's a, that was a lot of fun and very fulfilling. So after awhile, you know, and times change. So the graphical user interface came out, windows and the Mac and the languages we created were designed for dumb terminals that didn't have mice and pull down menus and stuff like that. So they became obsolete. So you have to, after a while, you have to take pride in the fact that you built a piece of art that was appropriate and perfect for the time that you created it. And that helps you leave it behind, frankly.

Ryan Tansom: I think there's a really interesting way to look at it. I mean, it was a bridge, a stepping stone in the, in the spectrum of time.

Roger Sippl: Yeah. And so anyway, um, I was disappointed though that, you know, I couldn't stay at Informix forever. I mean the, the, the pressures of being public and the ups and downs and the, uh, mistakes I made, I did make some mistakes later on. I acquired a company that wasn't really a great move because I was responding to the pressure of Wall Street that we should just get bigger for bigger's sake and I wish I had made those mistakes and that I could still be there running that company because that would have been great. And back in the day before my day, you know, when Hewlett and Packard started HP and the Intel guys, you know, they ran those companies forever. Yeah, they, they, they, you know, they died running companies. They retired out of them. That wasn't true for my era. It could have been. I mean, looking back on it, I could have taken that route, but I didn't know it. I didn't know that to be true at the time. So I think there's really two ways to do this entrepreneuring thing. One is to, uh, you know, you referred to them as lifestyle companies, but that, that might not necessarily be true. I mean, you know, I've, I've met some very rich people that started a fire hydrant company. They just, they're just very good at it, right? They're just good at running businesses and they grow them up and maybe they don't take them public. I think one of the richest women in America runs a software company that builds the ethics system hospitals in the US. So, uh, you know, sometimes I think maybe I should've done it that way, but the ideas were popping so fast and there was so much opportunity for growth and it was hair on fire growth.

Roger Sippl: And so you needed to raise a lot of money, needed to go to the venture capital community in order to get the fuel for that growth. And then you had venture capital partnerships that owned the majority of your company and they were, you know, five year, seven year, maybe 10 year long partnership, but after awhile they want to get their liquidity because they want to close that partnership and move on to, you know, the next partnership. Sequoya eight goes to Sequoya nine, right? And they have to dissolve everything quiet. So after, um, realizing that, you know, I was sort of entrepreneurial in this era where you're a cog in thes bigger machine of how companies are started and built in and then taken public and slash or sold. I realized, well that's sort of my destiny. But looking back on it, I think if I had to do over again with perfect hindsight, if I'd add to the money, uh, so I wouldn't have to sell so much of information or if I would have just accepted the stock options my board was trying to give me when I was getting burnt out on being CEO and making mistakes and stuff, I, I wanted to step down as CEO.

Roger Sippl: I wanted to hire someone else, but my board wanted me to stay on and they've been trying to get me me stock options for the past three or four years. And I kept saying, well, no, I got my founder stock. I thought that's how it should work, but I don't know why the hell I thought that. At the same time Larry Ellison was demanding all sorts of options from his company and he ended up growing his percentage ownership of the company, I think. But, but anyway, I ended up owning too little of it to make it a company where, where I could, I could be forever given all the other opportunities around me. Uh, it turns out my board was right. I should have let them give me a stock options in the company so that I was gaining percentage ownership so that I felt more a, you know, invested. That was more of my baby still.

Ryan Tansom: Well, it's interesting, there's a lot of these entrepreneurs these days that, you know, they're public, but they still call most of the shots and those guys are doing is totally ignore all the shareholders and people are saying they've got this playground of this enormous platform and cash flow that they just kind of get to do what they want.

Roger Sippl: Yeah. Well things went from where they doubled in size every year to where they went up tenfold in a year or more, you know. So the social networking thing was a completely different metric and completely different, uh, growth multiples that I've ever seen before. And so that generation know I'm really jealous of that generation because all of a sudden the b word tossed around early and often, you know, all these Unicorns, companies worth billions, entrepreneurs worth billions even before they go public. And that's just so foreign to me. I mean, uh, I, I feel like, you know, Babe Ruth who got, you know, was the highest paid ballplayer and he got like 20 grand or something?

Roger Sippl: When Informix went public company was the only worth $54 million dollars. I mean, I've, I've, I've participated in rounds of investing where the round was 100 million. Ten percent of a company or something like that. Uh, so, uh, the numbers are just very different now than they were in the eighties.

Ryan Tansom: Maybe that's an interesting segue into like, you know, the different ventures that you were investing because you've been an active investor in lots of companies where there was the VP of engineering or all these other companies over the decades. What's your perception of business value because you know, you went through your whole Informix journey and, but then you know, when you flip the switch and it's you, you're looking at it from an investors, investors' perspectives. And right before we jumped on the call, we were talking about perceived value and growing enterprise value. And so how did you look at these other companies and what would attract you to certain investments or certain companies versus others? And then what do you think that certain companies are doing these days to continue that value creation that is maybe affecting those numbers?

Roger Sippl: Well, I think the two fundamental thing is, has been and will be growth and profitability. So, uh, you know, if you can, let's pick sort of a, a middle number used to be the top numbers back in a day, but informatics we were, we were growing at 100 percent a year, you know, so our revenue would go from a $20 million to 40 million, 40 million to 80 minutes. Uh, and we had about 20 percent profit before tax. So both of those were great numbers, you know, it sort of maximum growth that Wall Street would give you credit for if you grew faster than that are present. They would kind of like discount. Well that isn't going to last. And the profitability was, was a really great before tax profitability percentage. So they could do math on that. They could say, okay, uh, you know, five years from now, what could this company be worth it large, multiple of value, you know, if they were paying 40 times earnings, you know, they could figure out, okay, well, will there be five years from now given that growth rate will slow down, the profit margins will probably shrink, but still, you know, it'll go down, you know, at a reasonable pace from here as they get to be a bigger company.

Roger Sippl: Uh, and so they could sort of value what they're, what the stock price could be. And it could be five x 10 x out five years. So good long-term investors would, would make that that when the growth rates started going to, you know, 10 full years, 30, 40 or 50, I mean, some, some of these social networking companies, you know, they never did that for their first few years. It just became very hard to value. And so people started having go to other kinds of metrics, like how much the total available market for selling ads, uh, from a web browser sort of became the thing that people had to measure. And if we only have two players, you know, you have two players going to be left, you know, Google and Yahoo, you know, what are, what, what's going to be the total available market and how are they going to divide that up? So all of a sudden they started using different metrics, but, uh, and got a much bigger numbers and they turned out to be right. I mean, I, I, I got to say, I just didn't see all that coming. Uh, I didn't, I didn't participate well in that era in the software industry.

Ryan Tansom: When you were… because you were investing in other companies, too, even though you said you didn't participate in some of these other ones, I mean, you were participating in other companies that you're investing in, you know, what were you looking at with these owners? What were they doing? Was it just growth and profitability? I did the interaction with Wall Street and going public and looking at value change how you perceive other people's companies.

Roger Sippl: Yeah it did. It wasn't just going public, but it was also a. all these companies got bought after we went public. Uh, so, uh, Informix Visagenic Vantive went public and then got acquired. And so I got to see how other entities value accompany. I got to see how Wall Street mutual fund managers value accompany when they decide whether to buy your IPO stock or not, whether to a body, you after your earnings report comes out. I got to see how larger companies value smaller companies and when I invested then in startups, I had the perspective that each entrepreneur doesn't have unfortunately, and I didn't have him when I started my first company, like I said, you know, to, to ask myself, okay, how big can this company grow to be? So is this product the kind of product where you can grow revenue? You can. First of all, the dog's going to eat the dog food. Does anybody want this product as sort of the first screen? But after you get past that, yes, people will buy this. They have customers already.

Roger Sippl: Okay. Then know are they selling it to, is it a product for all medical offices or is it just for dentists? Well, okay, it's just for dentists, but is that still a pretty big market? Well, okay, but it's just orthadontists. And what, what does it do for them? Does it just do billing, or does it do these other things? So, you know, I sort of learned how to size the market and how to look at a company and say, you know, how, how many of these can they possibly sell before they saturate their market? And then actually, more importantly, and this, I think I was better looking at than other investors. These entrepreneurs can, these entrepreneurs, okay, this is their first product. What other products can they develop or acquire? I mean, are these guys, are these people going to build a big company here one way or another?

Roger Sippl: Yeah. So if a group of people had a successful product and they were selling more and more of it everyday and it looked like they could do that for the next several years and they were smart and they were scrappy and they were hustling and they wanted to build a big company. Well then I kind of believed that, uh, that they were gonna build a big company, so then the market share of, of their first products didn't matter as much as an investment in the team and that's now I've played the investment game when I was planning that combination of sort of the product to marketplace that they're trying to sell it in. How big and how receptive is that market? How long will the sales cycles be, you know, how fast can they grow and then how good is this team, how big your company can they build?

Ryan Tansom: I think you hit on a bunch of really good points and one that I think a lot of people don't do enough of attention to is looking at the different angles that from a buyer's perspective. But then also when you mentioned the team, I, uh, I think there's a lot of people out there that might have a really amazing product or service, but somehow they can't formalize the team. And then all of those amazing numbers kind of are irrelevant.

Roger Sippl: Yeah. When you're investing they are. But you, you have to be able to visualize them getting bigger because at the end of the day, yeah, when the company gets acquired or goes public, their valuations going to be based on those numbers. So, uh, you know, how big are the numbers growing, what kind of profitability is in those numbers and you know, nowadays there's companies again every, every, a few years you can go public without being profitable. Right? And we're in that era again right now. And I think that's fine because some companies that could be profitable, particularly with the software, the service revenue model, you know, you sell a bunch of software but you don't get the book that as revenue because it gets paid to you ratably over the next three years. So you have a lot of deferred revenue and a company gets valued on the combination of its revenue and deferred revenue. So you can be unprofitable and go public again.

Roger Sippl: And I think that's okay. Especially if you're in a market that's a huge market and it's a land grab situation where either you're going to get that market share or your competitors are. So you have to raise money and spend it to go get that market share a while. It's still a land grab market. So the profitability thing, measuring companies on profitability, obviously in the social never been area in particular where these companies just losing billions of dollars. Sometimes you have to ignore what their profits are currently and you have to forecast out what their profitability can be when they decide they want to be profitable.

Ryan Tansom: It's interesting how you articulated how that kind of combines together, but when you get the land grab and you get different things that are happening and then allow that stuff to actually be part of the mechanics of the game. You know when you're. When you've been in introducing yourself to as a potential ambassador to some of these people. I mean, what are you seeing? What are some of the biggest red flags that you see people doing that they shouldn't, you know, that they should think about differently or know what are. What are some of the things that you've seen that haven't gone as well based on the different ventures they've gone into?

Roger Sippl: Well, first of all, let me clarify, I'm not really actively investing in new companies right now in the phase of my life where I'm trying to find all my money. You know, I, I invest in companies. I've already got investment in at this point. I'm just trying to bring a lot of these companies around maturity and resolution, either going public or get bought. But uh, when I was an active investor as the mistakes I made, there were several mistakes of omission where it was a good opportunity and I'm going to be a good company and I didn't think about, uh, so I've got a few of those. There's one venture capital firm, but I'm not sure if they've got a great write up of all the huge opportunities they missed and why they missed it. It's really funny, but the ones where I did invest, you know, sometimes I, I, I lost my discipline, you know, and I, I caved in and invested in companies that were just totally trendy, you know, when, when the Internet first got going for the Internet boom, you know what I mean? Come on. You know, so I invested in a few companies that were, can amount to the, uh, you know, frozen trucks delivering dog, kind of a jumble all the great internet losers together. There was a frozen truck company that other investors turned out and the delivering dog food or turned out dog foods with too heavy to deliver. I guess Amazon's going to make it work anyway.

Ryan Tansom: Oh, I get my dog food on Subscribe and Save. Somehow they figured it out, but I get my 40 pounds of dog food delivered at my door every month.

Roger Sippl: Somehow that works. I think that's the one that's gonna work for a while until the investors decide there's more money to be had.

Ryan Tansom: They want to actually achieve profitability?

Roger Sippl: A lot of these companies are still subsidized, I think, by hope. But uh, but I, I made as many as those kinds of mistakes as anybody. You've got to make sure companies to, at least in the enterprise software business, uh, you got to make sure that they're going to get their next round. Is that, that's the difficulty. A lot of investments I made sort of died. So after the a round we just couldn't get the b round. So the analysis I did putting in the, you know, the angel money or the preferred a money, it just wasn't accurate enough when it came time to raise money from real venture capital firms, you know, I just sort of, large angel funds know 10 million or 20 million, but if you want to go get a $5,000,000 round from a, a $10,000,000 round from two firms or whatever that, where they're managing three or 400 million, now they're advantaged billion. Back then it was, you know, the average probably two or 300 million. You had to be right. You have to be right about that market size opportunity because now you had to help the entrepreneurs put together a slide show that said, okay, we'll, we've got this product. It's exciting. Got a big market potential that the customers are buying it, you know, the dogs are eating the dog food, we just need money to make more dog food. But they weren't really there yet. They were missing one of those categories, like the product wasn't quite done yet. While that's happening during most of the time that I was an exhausting if the customers are buying it, you know, but the reference calls were, you know, luke warm, no, you're not going to get a preferred the pipeline sales pipeline for five times as big or 10 times as big as the number of companies you've already sold to. So it was just tough. There were eras, there were four or five years. It's just tough to get the next round of funding.

Ryan Tansom: As you kind of switched from, you know, working in that serial entrepreneur and informatics and some of these other ones and switched to investors, you know, how, how was it, you know, was there enough going on where it was easy to have your kind of identity change because I know a lot of people struggle with that when I say, Hey, what do you do? A lot of entrepreneurs after they sell, whether it's just one time a business, you know, how did you, how did you dynamically change your personality to deal with any struggles? I mean, it sounds like you had a lot of hobbies right now with the writing and the poetry and stuff like that, but you know, was it easy to adapt that or you know, how did you kind of go through that evolution?

Roger Sippl: Well, it was an evolution, so I was just solely an operating executive in my thirties, a late late 20th and 3:24 and took it public when I was 30 and 1986 and ran it until I'm 90 or so. And then around '92-'93, I left the company so I invested in Vantive in 90. And so that was the sort of the beginning of my investing career. So I, it's both in the nineties I both, it was sort of chairman nowadays you'd maybe call it executive chairman for awhile at advantage. So that was a little bit of operations but not as much as I probably should have done frankly in retrospect. But then I also started Visagenic while a Vantive was still private, so I was both an investor and a board sitter and an operating executive when I started visiting Genic and then I ran that company public, so was I think an operating executive at that company for five or six years. While I was also investing, so I brought on a partner, Jackie Mcdonald, and we formed Sippl McDonald ventures and she was reading all the business plans while I was an operating executive and then bringing me in right before, you know, she is making the decision to want to do it best the men. So when when we Visagenic public and sold it, that was sort of the end of my operating career. Then I had children and they needed my time and my company and my, my wife told me, new company, new wife.

Roger Sippl: Because being a leader of a public company, it was just too demanding. Well, trying to raise children, at least it was for me and my family. Every family's different, but I don't want to tell anybody out to live their life with regard to raising their family. But for me it was, uh, it was just too tough for too much of a handful. And so, um, then the investing life was okay because I really, I got back to that goal, right? I was making my own hours. I don't want to meet with a company. I don't know. I turned down the meeting. I want to be busier. I make a, I make more investments. So that was the right lifestyle for me during that time. So I don't regret not being an operating executive during, you know, uh, my, uh, my forties or fifties, but, uh, now I kind of do because I wanted to be an executive again, but there was too big of a gap from my last successful operating role.

Roger Sippl: So it was hard to a sign on as a CEO of a public company, CEOs of public companies get paid quite a bit these days. So I actually did want to do that a few years ago. And then I found it, uh, that, that people just, you know, I, I made it to the last round of interviews a couple of times, but they wanted to see more recent operating experience, usually went to someone who was currently had a CEO job or a headed headed the head of a division job. But I do spend my time still in the advisor role, which is probably the appropriate role for me these days anyway, uh, where I sit on people's boards. So I'm still on a, a four or five boards. I'm trying to get on more public company board. So I'm on one public company board, imperva software security software company. And that, that's a fun for me because it's sort of a culmination of all of my work in enterprise software because when people hack you, when they attack you and where did they go? I mean, they go to the database, they go to the application server. So, uh, now, uh, I'm on the board of a company that builds software to defend all the software that I built in my career. So that's kind of fun. And I'm looking actively looking for another public.

Ryan Tansom: Well, I think you've got an interesting note there because a lot of entrepreneurs after they're done, they don't know what to do and you know, I think they're always looking for the rush, you know, whether they made just invest in something just to be a part of something when they, you know, I think the advisory role in the boards is an interesting way to get exposure to that without maybe the risk and are the time constraints. I mean it sounds like you've been able to satisfy some of the, some of the yearning that you have with that.

Roger Sippl: It's really rewarding, too. I was on a board of a company in Provo, Utah, called Drive Communication, did not jive software in San Francisco they're… Drive Communications is a voice-over IP company. And it was really rewarding to help these people hard work and honesty stay as long. Great young people who really wanted some advice and some guidance. Not that they weren't doing great on their own, but just some perspective, things they worried about. Where I told them they didn't have to worry about that and things they weren't worried about, where I alerted them maybe look into that a little more. It just gave them a, you know, more confidence and more peace of mind. And, and, you know, they were grateful and your company did well. We sold it for I guess, uh, I guess I'm not supposed to say how much, but we had a really good exit and uh, that one's very rewarding and I enjoyed that. It wasn't a public company. I was kind of hoping they would go public so I could have another public board seat. Uh, but uh, they were in the size range of a public company. So it, it, it was a great experience. And I would, I would do that again. And uh, like I said, being on another public board, it would be a lot of fun, particularly if they've got a CEO who's a first time a CEO at a public company.

Ryan Tansom: So, you know, with all the different things that you've experienced. And then we talked about a bunch of stuff. Is there one thing that you want to maybe highlight for the listeners that haven't gone through things or you know, having exited, haven't really gone through the entire transition in their life stages. One thing that maybe you want to highlight or if we missed something that you want to make sure that we put in there, what, what would it be?

Roger Sippl: Well, if someone's just starting a company, I would encourage them to, uh, I start a company that's really good. Start a company you'd be willing to spend the rest of your life with. That's where it went. And then somewhere along the lines of what your life plan is and the earlier you do it the better. But, uh, if, if you want to start a company and be with that company until you retire, design it that way in terms of investors and investments in growth strategies. And on the other hand, if the nature of the company or the nature of the industry is such that that's not really possibly you're going to have to lose control early. And uh, yeah. And by raising a lot of money, well, you know, settle in with that, but know that, you know, you're probably on one of those two tracks and build the value that you want to build a according to which, which track did you get on?

Roger Sippl: Yeah. But now on a personal front, I would say know you touched on Ge some people and you've interviewed 100 people on this topic. So maybe some of these people after they were done selling their company, maybe they do have some sort of seller's remorse or you know, oh my God, what am I going to do now? Sort of thing. And, and you know, I'm in my early, early sixties and so, you know, a lot of my friends trying to figure out their retirement strategies and stuff and some don't have great retirement strategies. So in terms of what it, what are they going to do now? So I encourage people to live a well-rounded life. No, I, I, I never had a shortage of things to do. I never woke up and said, oh my God, I don't have a darn thing to do today. Uh, you know, I always had five careers, 10 careers I wanted to do, uh, you know, if it wasn't a doctor, it was in the software industry, it wasn't that, you know, be a counselor, be a teacher, be a professor, be an airplane pilot, the, a, just a professional writer, you know, a poet, a novelist, the journalist.

Roger Sippl: So there's all these things that I've always wanted to do and could have done as a career. You had to pick one. I had to pick a path and it turns out, you know, not really. I mean, you can, you can kind of semi retirement, you can pick a different career. You get to do something that you always wanted to do and just go do it and just go do it as if you were a pro at it.

Ryan Tansom: Find some passion and a purpose.

Roger Sippl: Something you want to do.

Ryan Tansom: Roger, absolutely had a blast having you on the show. What's the best way for our listeners to get in touch with you?

Roger Sippl: Well, uh, you can learn more about my creative writing [email protected] and I'm emailing me is fine. I would be happy to hear from your listeners, you know, if you want some advice, that's fine too. I'll be happy to try to give you the best advice I can, but I end up with 100 business plans in email, you know, if I see something I'll, I'll, I'll, I'll forward it to someone I know who invests in that kind of thing. But like I said, I'm not actively investing in new companies, but. So uh, Roger R o g e [email protected]. [email protected]. Sierra India Poppa Mike Alpha

Ryan Tansom: Roger, thank you so much for coming. It was a blast.

Roger Sippl: Okay. Well I had a lot of fun food. Thanks for having me.


Ryan Tansom: I hope you enjoy the interview with Roger. I had a lot of fun talking to him and if there was a couple of things that I really wanted to highlight that he said something that I think every one of us as entrepreneurs remember that your company and your idea and your creation and the evolution of your business is for a point in time. The value that you create and the reason that the market wants it is for a specific reason, so having that emotional attachment, I think as an extremely good thing, but also realizing that it too shall pass, should help you appreciate the moment, appreciate your clients, your employees, the community and what you've built, but then also realize that at some point you're going to have to figure out what to do with it, what's it worth and what's the best way you can transition it. So if you want any more resources about how to mentally deal with it, how to financially do with it, check out the website at Go on to itunes and give the life after business podcast a good rating. I really appreciate it and I look forward to next week.

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Written by Ryan Tansom

Ryan Tansom

Ryan runs industry-specific podcasts on his website which pertain to mergers and acquisitions, and all the life lessons he wish he had known then. He strives to bring this knowledge to his listeners in a way that is effective and engaging by providing new material each week from industry experts.

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