Executive Insight: Michael Brochu – Size Matters
Primus Knowledge Solutions’ chairman, president, and CEO Mike Brochu joined the company in October 1997 to set its vision, guide its growth, and represent the business to the board and investor community. He was appointed chairman of the board in February 1999. He successfully transformed the company from a small business with a single product into a multi-product company with market-leading technology, a European presence, and a Global 2000 customer base. He was also a key player in the company’s recent acquisition by e-Commerce provider, Art Technology Group (ATG).
With the acquisition expected to be finalized later this year, Brochu will take a seat on the ATG board of directors and help guide the management team.
Brochu also sits on the board of directors for:
> allrecipes.com, a web-based service for cooks.
> Captura, developers of expense management software.
> EmPhysis Medical Management, developers of business solutions for physicians.
> WSA, the largest technology trade association in Washington.
When the acquisition is complete, look for Brochu, a self-described “Inspector Gadget,” to resurface to drive a company in the high-tech or bio-tech industry – one with technology that “moves the rock.”
With the acquisition looming, Brochu took some time to talk with SSPA about the merging of the companies and what that means for Primus customers and products.
SSPA: Can you take a moment to characterize the acquisition? Did you go to them? Did they approach you?
Brochu: I don’t think it’s any secret that a lot of entities our size, and their size, have been talking with each other; ever since the economic downturn a couple of years ago. Since then, a couple of things have become evident. One thing is that size does matter -- critical mass is increasingly important. It’s a matter of being of a certain size to handle being a public entity. With Sarbanes-Oxley, and accounting, legal, and auditing costs, you need to have significant mass. That size also makes a difference from an investment strategy standpoint.
From a customer standpoint, viability is important and viability and size go hand-in-hand. If you’re bigger, you have more money, more resources, more where-with-all, greater product breadth -- you’re more attractive for customers to do business with.
So we’ve had a lot of largely casual conversations leading up to June of this year. That’s when we got serious. This merger makes a lot of sense. What they do on the e-commerce side and what we do on the e-service side make this a perfect fit. There’s almost no overlap. They saw the need to get into our space with many of their customers clamoring for additional e-services to go with ATG’s e-commerce suite. We were seeing the same thing in our business.
Together, the companies will have revenues in excess of $100 million which is significant and meets the size requirement and it’s a positive psychological cutoff. It puts the company in a different category for institutional investors and the company will have a product breadth that means some customers have a one-stop shop to meet their needs.
SSPA: How will the products fit together? What will the resulting suite look like?
Brochu: I think one of the toughest sells in today’s software environment is systems integration. Customers want you to be able to come in and just drop-kick systems into place. You’re ahead of the game if you have a variety of pre-integrated modules, which we’ll have. A lot of companies also need both e-commerce and e-service functionality. To prove both points, once we announced the acquisition, we had a number of customers, more than a handful, say “now we can deal with just one vendor, that’s awesome.”
The companies have similar corporate strategies, similar histories and backgrounds, and similar cultures with a lot of passion and the desire to build the best product. We both develop products using J2EE, run on the UNIX platform, etc. so integrating them should go smoothly and we’re working on that effort now.
SSPA: As the products are integrated and become ATG products, how do Primus products change? What changes for customers?
Brochu: The answer is pretty simple. According to the analyst groups, we’ve built some of the best products in the knowledge management/e-service space. We will continue to do that. Because the product lines don’t overlap, neither product line will be impacted much. We will have developers who are laser-focused on building each product line.
Each group of developers has acquired a fair amount of expertise over the years and we’ll let them continue doing their work. What we will add is a contingent that will oversee and be inter-twined within the groups to ensure that everything fits together. We want to make sure the individual products remain best-of-breed while combined, they present a best-of-breed product suite.
Current customers will not be negatively affected. The same goes for ATG products and customers. From a positive standpoint, plenty happens. Common customers get products that are pre-integrated and come from a single vendor. We have to be able to continually upgrade customer to the latest and greatest features and technologies, that’s what they want and that’s what they pay maintenance for so it’s important for us to efficiently manage development including the integration piece. We have to have a combined suite that works well together.
SSPA: How long will it take you to offer the integrated suite to customers?
Brochu: We’ll be able to deliver integrated packages when the deal is complete. We’re working on it now and we’ll have the first-level integration finished when the deal is signed, if not before. We’re working with customers as we speak.
To get the deeper integration of product lines complete will take until the middle to end of next year. We’re built on similar architectures so it isn’t like trying to fit a square peg in a round hole.
SSPA: What are your plans for what to do next?
Brochu: I’ll be moving on and looking to drive another company. There isn’t typically room for two CEOs and I make a lousy employee. My background is in high-tech and I love that space. I haven’t spent a lot of time thinking about it because I’ve been focused on making sure we run a good shop and we get the deal closed. It will have to be something that I can take an interest in and passionately get behind.
|