The history of a successful company often reads like those tense moments from a baseball game: With the team locked in a tight contest, the hero steps to the plate.
After fouling off a flurry of nasty pitches, the hero figures out the hurler and starts a rally. Unfortunately, that’s when the opposing manager lumbers out to the mound and calls for an ace like Pedro Martinez to come in, snarl a bit and throw a vicious curveball to end the threat.
In Ed Iacobucci’s case, the Cy Young Award winner facing his company, Citrix Systems, was the business equivalent of the Red Sox flame-thrower — Microsoft. Citrix was partnering with the software giant when Microsoft decided to take the ball and play its own game against Iacobucci’s company. The result? Citrix stock plummeted 60 percent in a single day.
That was only one of the roadblocks Iacobucci faced. He’s encountered — and conquered — others, allowing Citrix to survive and thrive with Iacobucci’s eye set on the next century. Here’s how he’s done it.
Culture is critical
Citrix started in 1989 with one of the most important pieces of capital equipment any software company owns: a coffee maker. It went on to license the OS/2 source code from Microsoft. With that, Iacobucci was able to raise $3 million in venture capital and hire 18 people, 17 of whom defected from Microsoft.
From the beginning, Iacobucci instilled the proper attitude into his people.
“The culture is the thread that runs through a company” as it grows, he says. “If you want to be big, you have to act big, even when you’re not.”
The lessons Iacobucci learned that first year were evident: Create the proper culture, think big and remember that partnerships are vital.
In the second year, Citrix finally developed a logo. The now familiar lettering was created using beer cans. Then Iacobucci raised another $3 million in a second round of financing; his company created 350,000 lines of code, and, knowing his limitations, he hired a CEO.
And despite how well things were going, Iacobucci was reminded: “Nothing really happens until you sell something.”
Persevere
Citrix’s third year began with the completion of its first product — the multi-user OS/2 — based on the partnership between Microsoft and IBM. In February of that year, the two computer giants announced a divorce. A month later, Citrix was out of money and surviving on 10 bridge loans which totaled $1.2 million.
It would have been easy for the company to fold, Iacobucci says, but instead it pressed on. In late July, Microsoft and Intel invested in the company. Iacobucci also credits the venture capitalists for refusing to bail when things looked rough.
It was also that year that Citrix made a key strategic move — converting from a technology-based enterprise to a solutions provider.
Humor helped get the company through that trying time, Iacobucci says. A Far Side cartoon from Gary Larson kept the team focused on its goal. The cartoon shows two spiders sitting on the railing at the bottom of a child’s playground slide over which they’d woven a large web. One spider says to the other: “If we pull this off, we’ll eat like kings.”
When the company was able to raise an additional $2 million in a third round of financing (“You’ve got to get the money while you can,” Iacobucci says) and finished the year with $300,000 in net revenue and 40 employees, it taught them all a valuable lesson: “That which doesn’t kill us makes us stronger.”
Develop customers
Over the next few years, Citrix developed partnerships with Novell, Microsoft and hundreds of smaller resellers. The goal was to focus the company’s energy on its customers. By 1993, revenue reached $5 million and the company employed 65. In 1994, Citrix saw its first $1 million month and got rave reviews from industry observers. Citrix was on its way.
“The trend is your friend,” Iacobucci says, and he took advantage of every opportunity. In 1995, Citrix went public and Iacobucci maneuvered his company into lucrative licensing agreements with Microsoft, Sun Microsystems and IBM.
Surviving a knockout punch
In 1997, Citrix received notice from Microsoft that the company was going to enter into the market as a competitor. At a shareholders’ meeting on Feb. 26, Citrix issued a press release announcing Microsoft’s plans. Citrix’s value dropped 60 percent in 15 minutes.
For nearly two months, Citrix’s stock value remained relatively flat. But on April 12, Citrix announced an agreement with Microsoft (with the company’s endorsement) and the stock immediately regained the 60 percent it had lost.
A chart of the stock value with the two-month dip resembles a “smiley face,” Iacobucci says. The lesson from that period: You have to believe in what you believe in. Says Iacobucci, “You must be honest with yourself and seek win-win relationships.”
Epilogue
Today, Citrix boasts a market cap in excess of $8 billion, more than $700 million in available cash and more than 1,000 employees worldwide. The company has seen 17 straight quarters of growth. Citrix was also added to the S&P 500, replacing the spot vacated by Mobil Oil.
Despite the success, Iacobucci refuses to forget the struggles he faced to get there. As a reminder of his battles, he keeps that fateful press release framed in his office.
Dan Jacobs ([email protected]) is senior editor at SBN.
