01 Dec 2000
Driving the Information Busby Julia Hanna Topics:
In a few years there will be no such thing as an e-business," says Vivek Y.Ranadivé (MBA 1983). As founder, chairman, and CEO of Palo Alto-based TIBCO Software, Inc., (www.tibco.com) it would seem that Ranadivé is predicting the demise of his own company. Among other functions, TIBCO's software provides the infrastructure (or"middleware") that makes e-commerce work across disparate computer systems. His meaning, however, is just the opposite..
"The concept of e-business will disappear because every business will be an
e-business," Ranadivé explains. "Physical stores won't go away; they'll be
knitted into the fabric of how people buy and sell goods and services."
Skeptics might disagree with such a sweeping declaration, but they would be
hard-pressed to disregard TIBCO Software's growth since its founding in 1996. Total
revenues for fiscal 1999 were $96.4 million, an 83 percent increase over the previous
year. The company, which employs about one thousand workers worldwide, went public in
July 1999; an article that appeared last February in Red Herring's online edition (www.redherring.com)
noted that TIBCO's stock had risen 1,200 percent from its initial public offering
price. With a $15 billion market cap and a $300 million revenue run rate per year,
TIBCO is one of the fastest-growing software companies ever.
Like any corporate executive, Ranadivé is concerned with the dollars-and-cents
valuation of his company and how that affects future growth. But he drops the word
"dream" in conversation more frequently than "market cap," "stock options," or "IPO."
A native of Bombay, India, Ranadivé says he feels both international and
American. "You can have big dreams here," he remarks. "The United States is a very
multicultural and open country. When dealing with technology, open systems that can
be leveraged by anyone will thrive over closed, proprietary systems; I think of the
United States as an open system in that sense."
One of Ranadivé's earliest dreams was to study at MIT, which he learned of
through a documentary film on the institution. Despite the economic and emotional
difficulty of attending the faraway university, Ranadivé persevered, and in
1975 he arrived in Cambridge with fifty dollars in his pocket. He credits his parents
for their support of his plans. "My family comes from a tradition of education and
public service," he says, noting that his grandmother was the first female judge in
India and that his father, who now lives in California, is involved in charitable
projects in India and the United States. In four years, Ranadivé completed a
bachelor's degree in electrical engineering and a master's in mechanical engineering.
After a brief stint at Ford Motor Company and with the network equipment provider
Linkabit, he decided to enroll at HBS.
"I wanted to get the best education, and I felt that Harvard was the best business
school," Ranadivé states, citing the case method and the quality of the HBS
faculty as among the School's strongest attributes. "In some ways the case method
explains why Survivor was such a popular television show," he laughs. "You throw a
bunch of people into one classroom and see who shines. I wanted to learn more about
people and human interactions, so HBS was an extremely valuable experience for me."
Not long after leaving Soldiers Field, Ranadivé had an idea that would
transform the computer industry. "My background was as a hardware engineer," he says.
"If you look inside a computer, there's a back plane, or bus, with cards that plug in
to run the machine's functions. My idea was to create a software bus and plug
applications into that." As simple as it sounds, this insight had a dramatic impact
on the financial services institutions that were among Ranadivé's first
customers. (TIBCO is an acronym for The Information Bus Company.)In 1985, investment
banks were researching new systems for streamlining the flow of data. When
Ranadivé arrived at Goldman Sachs, his first potential client, he was
astounded by the complicated assortment of monitors, cable, and wire surrounding each
trader the mix even included strategically placed electric fans to cool overheated
equipment. Former Secretary of the Treasury Robert Rubin, then head of Goldman Sachs
equities trading department, hired Ranadivé's newly formed Teknekron Software
Systems to consolidate this hodgepodge of data traffic to work within a single
desktop computer. His software did just that, and before long Teknekron dominated the
business of automating trading floors. In 1994, Ranadivé sold the company to
Reuters Group PLC for $125 million; it now employs some twelve hundred workers and
operates separately as TIBCO Finance Technology Inc.
Rather than retire at the ripe old age of 36, Ranadivé developed his software
bus for other industries under the umbrella of TIBCO Software. "In many ways, the
trading floor of the 1990s was a microcosm of e-business today," he observes.
"Starting a company to automate the financial industry was the greatest training
possible for the Internet revolution." TIBCO now provides software to a range of
industries that includes high-tech manufacturing, telecommunications, energy, retail,
e-business, and the Internet. Motorola, Intel, Enron, Cisco Systems, Procter &
Gamble, Delta Air Lines, and Yahoo! are just a few of TIBCO's customers. Diverse as
these companies may be, TIBCO's product performs the same essential function for all
of them: delivering information across networks in real time. Ranadivé shares
his expertise in his 1999 book, The Power of Now, in which he explores the impact on
business of what is often referred to as "event-driven" software or "push"
Beyond the wide-ranging influence TIBCO already enjoys, Ranadivé envisions a
"metanetwork" of the future. "There'll be ubiquitous computing," he predicts, "with
billions of sensors and microprocessors. For example, your lawn will determine that
it's dry, and sprinklers will automatically water it." The more immediate task at
hand, however, is keeping TIBCO on top.
"One of the biggest challenges is to make sure we continue to hire really good
employees," says Ranadivé. "We have lots of millionaires around here plenty
of people who don't have to come to work every day. I need to have dreams that are
big enough to keep them interested.
"Another concern is staying nimble," he continues. "Someone in a garage right now is
inventing a product that could be threatening to me. It's important to stay paranoid
and avoid complacency."
Which isn't to say Ranadivé doesn't find time to play tennis or bicycle with
his two sons (ages 16 and 12) and his 7-year-old daughter. He also serves on the
board of San Francisco's Jewish Museum. "I view Judaism as being the source code for
Western civilization," Ranadivé remarks. Hindu by birth, he prefers to
envision a world in which shared values take precedence over individual religions.
A strong belief in the advantages of open, accepting systems whether technological
or theological underlies much of Ranadivé's philosophy, particularly when
he considers TIBCO and his function at the company. "My role is to let people do
their own thing and make sure that what comes out is music. It's more like leading a
jazz group than a marching band. That's the job of a leader."
Class of MBA 1983, Section B