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Rony Ross selling her Panorama Software technology to Microsoft

 

 Eight years after its first financing round, selling its technology to Microsoft for $20 million, Panorama Software Systems is holding a new financing round.Gilad Nass   13 Apr 03   16:32

Roni Ross

Roni Ross

Ross was the first Israeli to sell a company – to be accurate, most of a company – to Microsoft (Nasdaq:MSFT). At entrepreneur conferences, which are not exactly bastions of feminism, she and Ornet cofounder Dr. Orna Berry (now chairperson of Lambda Crossing) are always cited as proof that ?you don?t have to be a man to succeed in high-tech.?


After working for years in various positions in Israeli companies, Ross went to the US in the 1980s to complete a Ph.D. in computer sciences. She founded a company to market voice mail systems, which failed. After joining CAD/CAM (Computer Aided Design / Computer Aided Manufacturing) company MetalSoft, she returned to Israel, after convincing its owners to set up a development center in Israel. Ross later sought alternatives after it became apparent that global demand for CAD/CAM solutions was stagnant, and founded a new company to develop Microsoft Windows applications.


The company?s activities in Israel exposed Ross and her team to market needs, and she decided to switch to OLAP (online analytical processing) business intelligence software, which provide executives with graphic depictions of market conditions, instead of having to wade through mountains of data. In contrast to companies that still based their programs on DOS interface, Ross gambled on Windows.


Ross financed her company from her own pocket, after local venture capital funds declined financing. She did not want a grant from the Office of the Chief Scientist. She founded Panorama Software in 1993, and began amassing Israeli customers within two years. She still needed money, and in July 1995, Ross convinced Ariel Landau, a former executive at Elbit Systems (Nasdaq: ESLT; TASE:ESLT) and Elscint (NYSE: ELT ) and now manager of Pamot Rehovot Advisors, and another partner to invest $200,000 – less than half the amount she had asked of the venture capital funds.


Picture-taking in front of Microsoft


The rest is history. A stubborn pursuit of OLAP expert Nigel Pense led to a meeting in an English pub. Pense was so impressed that he promised to help the tiny company, and shortly afterwards published a report praising Ross?s technology.


At this point, Ross decided the time had come to expand outside of Israel. In 1996, she began meeting with international software companies, including forming personal connections with Microsoft staff in Seattle. ?I even traveled to Microsoft to be photographed in front of the company?s sign to tell them I had been there. I couldn?t think about anything else,? she relates.


Panorama Software?s staff presented their software to Microsoft?s team, after which they were asked to stay for another meeting. Three hours later, Microsoft offered to buy the company. Ross owned 87% of Panorama Software at the time.


?We had 60 customers in Israel at the time, including major companies like IDI Israel Direct Insurance, Sahar Israel Insurance Co., the Israel Prison Service, Cellcom, and Elite (TASE:ELEI1),? says Ross. ?Microsoft didn?t plan to acquire our product and sell it as is. They wanted the development plans in order to integrate them into their work environment.


?How would that have affected our existing customers in Israel? Who would support them? I therefore proposed they buy the technology, rather than the company. They also realized the logic of having a partner in at least one place who could sell existing customers the product developments derived from the technology that they would later try to market. They did not reduce their offer, but actually raised it a little, because the Israeli customers were a kind of liability, and they would have had to invest more resources in continuing to handle them, were they to take over the entire company.?


?Globes?: It was widely rumored that the deal was worth $20 million. You?ve always declined to comment about the amount, despite attempts to reveal such information.


Ross: ?It was in the area of the amount you mentioned. I?m so used to being careful not to reveal the price that I don?t even talk about it to myself.?


Multi-exits


The deal was completed in October 1996, and Panorama Software?s original development team moved to Microsoft?s offices. ?The fact that Microsoft bought the technology and not the company kept me alive,? admits Ross. ?If I had sold the company, I?d have been left without a framework to exploit opportunities that came up a few months later, when Microsoft decided to stay in the field and provide the technology on the server side. In effect, Microsoft enabled us to reenter the field by offering client-side products. As in similar agreements, we signed commitments not to work in the side for five years afterwards. Since they stayed in the server field, they didn?t care that we sold supplementary products to the other side.?


Because the Microsoft deal caused Panorama Software?s original development team to move to the US, the company hired a new team, headed by Kobi Averbuch, who,four years later, is still R&D director . The old team trained the new team for a few months to support the company?s existing customers. Once Ross realized that Microsoft was leaving the client field open, the new team began working on new developments.


The five-year non-competition clause in the agreement ended in 2001. Coincidentally or not, Microsoft then acquired Israeli start-up Maximal, which became the basis for Microsoft?s Data Analyzer. This is a wholly client side product that, for $150, displays the user?s Excel data graphically .


Ross was not satisfied with just one exit. In 1999, she signed an agreement with Canadian business intelligence company, Cognos Incorporated (Nasdaq:COGN; TSX:CSN). The agreement stipulates that Cognos will have exclusive worldwide marketing rights (outside Israel) to Panorama Software?s second-generation product. Ross says that after waiting for Cognos to act, she realized they had no intention of marketing the product, and she cancelled the agreement in 2001.


The contract stipulated that Cognos would pay several million dollars in advance on future royalties, with no right to demand a refund if sales failed to materialize. ?There?s never any harm in earning money, especially for a small company,? said Ross, with a mischievous smile.


?I add every function the customer wants to the product.?


Ross has said in the past, and reiterates now, that she preferred not to get a grant from the Chief Scientist, in order to avoid future obstacles, in the event that she wanted to sell the company to a foreign buyer.


Did you always plan to found a company for sale?

?It was a very hard decision to take. I had received a grant from the Chief Scientist for my first company, so I knew exactly how the procedure works. I nevertheless decided to fund Panorama Systems myself. When I met with Microsoft, they asked me if there was any reason that deal might not go through, and I could tell honestly them, no.


?It?s not that I had planned from day one to found a company for sale, but it was obvious that if I wanted to reach international markets, I had to plan in advance to collaborate with international companies. There aren?t any clever tricks – in order to break into the international market, and grow over time, you have to enter into these partnerships.?


The decision not to seek the assistance of the Chief Scientist was just one facet of Ross?s three-step plan. The second stage was a mad rush to win Israeli customers, in contrast to most Israeli high-tech companies that view the Israeli market as a secondary market at best. ?I believed that if I could approach a large partner with a large customer list, I would be more credible. When I told Microsoft that I had 60 customers in Israel, some of them major companies, it proved I was serious.?


Panorama Software?s third facet is its technology, and Ross claims it is the secret of the company?s current success. ?I add every function the customer wants to the product. That?s a heavy burden on my development team. At one point, I had 20 versions of the product. Since all the customers were only a half-hour drive away, it was a lot easier to visit them and meet their demands. An international company can?t do that.


?Sometimes, the weirdest customer demands have become our most popular products. In Business Intelligence, you almost always find to an enterprise that already a particular kind of system, and they know exactly what they want the next product to do. It?s therefore crucial to listen to each customer?s specific demands. I worked with Cognos?s staff, and it was another world. Their development guys never saw or spoke with a customer in their lives.?


Leaving the driver’s seat

The interview with Ross was conducted moments after she had lectured at a joint Panorama Software-Microsoft conference. The companies maintain close cooperation. It took place two weeks after it was clear that the company had completed a multimillion dollar financing round, its first since 1995, from US venture capital funds Ross declined to name them.


Panorama Software moved its development center, which has 35 employees, to Toronto, after the company?s Canadian investors proposed that city as the base from which to conquer the North American market. The fact that besides, New York, Toronto is the only North American city with direct flights from Tel Aviv was also a consideration, says Ross. In a related measure, Janice P. Anderson, a former director of customer relations at Lucent technologies (Nasdaq:LU), was appointed CEO. Ross kept her position as executive chairperson.


Ross naturally decline to expand on the company?s revenue, noting, ?Part of business intelligence includes keeping secrets from competitors. She claims revenue in 2002 was 40% higher than in 2001. Ross believes it is now easier to explain to companies why they need business intelligence solutions. ?Despite the cuts in IT investment, companies need to know why and where they?re losing customers more than during the period of euphoria. We provide the tools to help them figure it out,? she says.


On stage before 300 conference participants, Ross looks like someone to whom it is important to clarify that a financing round is not a sign of financial distress. ?Following the announcement about the round, people began asking me what had happened. We managed for so long without external capital, and suddenly we were raising money. The financing round is intended to invest more in growth, including paying an American CEO and opening a regional office. The fact that we now have more partners in decision-making processes improves our position,? she says.


I envision a different scenario: Panorama Software has acquisition offers, possibly from Microsoft, and you want to raise the value of the company. You?ll use the money in the coming months to win new customers in precisely those regions that are important to the potential buyer.

?This investment is intended to raise the company?s value, but we have no acquisition offers at the moment, not from Microsoft or anyone else. At least, no offers that are relevant to us. We believe that the IPO market will recover in three of four years, and we?re definitely considering that option. But Microsoft has already surprised me once, and they might do so again.

?I think that until now I?ve done the best I can for me and my partners, but the time has come to begin something different. After driving for many years, it?s amazing to sit in the passenger seat and watch the awesome ride.?
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Getting its shares traded on a stock market used to be the dream of every young
Israeli company. Paradigm has taken a different path.

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When we expand, we will prefer companies, which – like us – contribute to the community

When we expand, we will prefer companies, which – like us – contribute to the community

by Zehava Dovrat 21.5.2002 Globes on line

 

Nessicom, a start up company in its R&D stage, found time during its battle for survival to perform activities for the benefit of the mentally challenged in the Newe Amal Home. David Guterzon: “Meeting software experts opens a window for the mentally handicapped, through which they can feel for themselves what is happening today in the computer world.”

 

Nessicom, a start-up company for developing location-based services in the mobile Internet environment, won the Globes Award for Small Business for its voluntary activity for the benefit of the mentally handicapped.

 

Nessicom was founded in 2000 and employs 10 people, 7 of whom are software engineers. The company has already launched several products after having performed various business changes in direction. To date Nessicom has a certain income, but is still fighting for its survival. Nevertheless, the company is already contributing to the community. Yaara Yanay (wife of Elisha Yanay, president of Motorola Israel) is the general manager/CEO of the company and David Guterzon, VP Development, is in charge of the activities for the community.

 

Since September 2000, Nessicom employees – both managers and workers  – meet on a regular basis with the mentally challenged in the Newe Amal Rehabilitation Home and teach them computer skills: applications, software/programs, educational software, games and surfing the Internet – depending on the wishes expressed by the members of the Home. Nessicom employees, all experienced programmers, come to these meetings every two weeks and bring along not only their expertise, but also their readiness to encourage the members of the Home, and give them a sense of belonging and being part of a group.

“Our willingness to communicate with them and to be there for them when they make their first steps in the computer world won the appreciation and enthusiasm of both the handicapped and of those who take care of them”, says Guterzon.

 

Ms. Sigal Guterzon, the psychologist who initiated the whole project, has accompanied it all along. With her help, Nessicom’s staff succeeded to bring about major changes in the mentally handicapped by creating personal contacts with them and building their confidence. The meetings with healthy people improve both the self-image of the mentally challenged and their quality of life. “The project involves a population that is usually ignored by others, except for those who take care of them”, adds Guterzon. “Meeting software experts opens a window for the mentally handicapped, through which they can feel for themselves what is going on today in the computer field, which is changing our whole society. Thanks to these encounters the mentally handicapped are willing to take risks and face new challenges. They take courses on operating computers, and in certain cases they even work with computers. The project clearly contributes to uplifting their moral and that of their supervisors. The handicapped are highly motivated to learn and to apply what they have learned with us in their daily life.”

 

 

How was the project born?

 

Guterzon: “The initiator was my wife, Sigal, who worked for many years with the mentally handicapped in the Abarbanel Hospital. She came to the conclusion that taking care of the handicapped only keeps them physically healthy, but if you want them to be proud and appreciate their life, you must give them the opportunity to meet people they can respect and who will treat them as equals.

 

“When we founded Nessicom two years ago I was trying to introduce Sigal to big companies so that they would participate in activities with the mentally challenged. After a short period of time I said to myself:  I believe in this project, so why don’t I do it in Nessicom ? I raised it with our general manager and after 10 seconds she agreed.

I am a great believer in community involvement, but in the companies I used to work for it was hard to implement. Here, in Nessicom, the positive response was instantaneous and all of us feel a great deal of satisfaction.

 

Twenty mentally handicapped people participate in the project, and Nessicom employees even took courses to learn methods of approaching the mentally handicapped. T            hey have been doing this voluntary work ever since. “We don’t put money into the project”, says Guterzon, “we invest time: once in two weeks 3-4 of our people go to Herzelia for one and a half hours. It is great fun for our employees. Usually we work under a lot of pressure, but in those days we leave work around noon, and on the way to Herzelia and back we chat amongst ourselves and share our experiences. We have good personal contact with the mentally handicapped: When we enter the room, they greet us with joy and happiness, and it makes us all feel wonderful”.

 

According to Guterzon, the company management and the employees feel that the project helps build an organizational culture and adds to their feeling that Nessicom is part of the community and is contributing to it. In this way the company carries out the philosophy of the Yanay family (company’s main owners) of involving businesses in the community, a philosophy based on the conviction that such involvement contributes to the business indirectly.

 

Does such an activity contribute to the business ?

 

Guterzon:  “Certainly, both to the company and to the people. It makes us proud. We added to the website of the company a chapter on contribution to the community. Other companies speak of us and some even try to adopt our approach. I think it builds an organization culture, and indeed nobody has left our company. I believe that it also gives added value to the company in its relations with other organizations. I would like to believe that our company earns the respect of others because of this community involvement and that it gets credit for it.  In the future, when we start to market our products, it might also increase our sales.”

 

 

Guterzon also thinks that when the company is bigger and has the opportunity to choose with whom to work, it will prefer other companies that contribute to the community. “It reflects the company’s character and its ability to do things not only for profit. It has an added value.” But for now Nessicom cannot afford to be choosy.

 

Like many others, Guterzon is convinced that contributions to the community must come from within the people themselves. People will not start to get involved in the community just because they are expected to include such activities in their reports. He is convinced that with time more and more companies will join in, and it will be only because they believe in the idea and not because they have to.

 

In the future Nessicom plans to continue to teach the mentally handicapped more about the Internet, about additional programs, help them design web sites and to correspond with other groups of the project via e-mail. “At this stage we are focusing on one group, but we are considering expanding our activity to more groups when we get bigger”.

 

“The Globes Award, which we received, can help make us an example to other start-up companies, who can do this kind of activity from the start. This will only do them good. An award such as this one can promote contributing to the community more than 100 speeches by the Minister of Finance.”

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Former Scitex workers create Ex-Scite-ment

Were always talking about how the Web creates communities. Aharon Nizani, Eva Duvdevani, Etan Rozin and Dan Zetland decided to create one for the ex-Scitex-ers, formalizing an already existing network.
 

Volume 26, Number 14, page 2 of the Seybold Report on Publishing Systems, April 14, 1997.

Former Scitex workers create Ex-Scite-ment

Were always talking about how the Web creates communities. Aharon Nizani, Eva Duvdevani, Etan Rozin and Dan Zetland decided to create one for the ex-Scitex-ers, formalizing an already existing network. By word of mouth alone, in two months the ExScite site (http://www.rozin.com/exscite) already has grown to 310 members and is adding 10 more per week. What’s the draw here? The ExScite crew sees it as a worldwide virtual networking tool. As Craig Kevghas (ex-Scitex PR, now head of the CPR agency) pointed out, In such a close-knit industry where who you know is a key to finding out what you need to know, having an up-to-date contact list of people is a great tool. Its also true that Scitex has employed, trained and thereby provided the publishing, printing and computer industries with a substantial amount of talent. This is a way to keep in touch with people as they change companies.

Think of what headhunters could do with this or associations looking for members. Since most companies ex-employees scatter, why would they want a site like this? Ex-Scitex and ex-Atex employees have always been close and very much a network of their own. (We suspect this is also true of ex-CG people too, but we can’t say from personal experience.) Maybe its because camaraderie and shared experiences have created a sense of togetherness, a bonding even for those who didn’t know each other while working at the company. And in general, most of the Scitex ex-employees have stayed within the growing definition of our industry. So an informal network of ex-Scitex people was formed to provide a means of keeping up to date on who’s now where, what’s happening or about to happen at Scitex, contacts for jobs or consultants, finding products, getting information on companies, etc. A week doesn’t go by that the network isn’t used extensively. ExScite was formed to encourage this networks growth and to provide a virtual place for news, gossip and discussion in addition to establishing a database of addresses.

Etan Rozin (Inside Out Designs http://www.rozin.com) donated his time and talent to devising and implementing the nicely designed site. Regional coordinators on each continent keep track of people and administer the database fields. Already contacts have been made through the site that have helped some of the members. Former executives such as Efi Arazi, Arie Rosenfeld, Yair Shamir, Bob Caspe, Dani Herzka, Bruce Popko, Roger Mattalon, Paul Rosenbaum and George Carlisle have joined, as well as R&D, sales, support and marketing people showing broad appeal and a wide-ranging constituency. The site also provides a set of links to members companies (with a special section for members who have either started companies or become CEO’s) industry resources, news sources and search tools. Many outside companies have expressed interest in the site.

Future plans.

Plans for the site are evolving but there are already ideas for adding headhunter links, special offers, discounts and advertising, along with the vision for turning this into a worldwide networking tool for our industry. The ExScite crew believes there is a lot of value for members and that industry companies including Scitex could also benefit.

Check it out!

Caren Eliezer
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