Edgewave: Learnings Part 1

So, I left Edgewave in February in 2012. I hung around a bit through May to help with the transition. But it is time to examine learnings. I will start today with the Merger issues that happened.

The biggest problem with the Merger was the Sales issue and I have already talked about it. But to recap, the former St. Bernard Software Sales team was not interested in selling the Red Condor product. It was considered by them too much work for too little return. This was on top of the challenge of selling a SaaS model over an appliance model. The SaaS model acts like long term commission stream and most high tech sales people want the up front cash that comes with selling appliances. This was a big part of the Sales problem that we during integration.

The other big integration challenge came with all the details of being a SaaS company compared to an appliance company. Even though Red Condor developed its own mail filter, the customers really saw the network deployment that included things that were developed and things that were integrated. We ran the network and its operation was actually the service. The product was important to that, because that was the way it was done - but you can build such a service and use Open Source to develop most of the filter. St. Bernard developed products and then their customers deployed and operated them. This difference created a huge cultural barrier. I had great difficulty explaining to most folks in San Diego the things that were important to me. I had to create the cost model that we used to understand how much each mailbox in the data centers cost us. There was a general lack of understanding of the way we evaluated things. Let me use an example. We had a customer that wanted us to change a network implementation in our data centers for a purpose that they had. My question to our HQ was "Is this a one off or do we want to offer this as a standard SKU?" I could never get a straight answer, because they didn't understand the question. For me a one time thing meant that the customer was important and we would manually manage his request. If we were going to make it a standard, then we would need to make a process and possibly automation around implementing it. For a product company this is a much different decision. Can the product do something? That is a qualified yes or no answer (it could be a yes with limitations). We didn't have to make something. We simply had to choose to let the customer do what he wanted and support it.

This cultural difference spilled over into so many different aspects of the company from finance to customer service to development that it was very hard to work together. The problem was that we never seemed to want to work on changing things so that they might work for both sides. In most cases, it was simpler just to have two separate systems and that added cost. What is at the heart of this was that St. Bernard WANTED to buy a SaaS company. Then most of the firm promptly ignored what that meant in practice. I think this is a cautionary tale for people wanting to push M&A as a growth path. Remember, the companies have optimized themselves for their business as it is constructed. Taking two businesses that work very differently and trying to shove them together is hard - very hard.

Jim Sackman
Focal Point Business Coaching
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