
How We Hit $912 Million in Sales - gavreh
http://www.inc.com/magazine/201307/christine-lagorio/jack-dangermond-how-he-started-esri.html
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npalli
He started with $1000 and grew to $912 Million over 43 years. That's
compounding annually at 38% percent. I was surprised that after 43 years it is
still under a billion. Just goes to show how big a billion dollars is :-).

He must also really really love his space and company, nowadays when companies
are flipped in 43 weeks, he is going on for 43 years. Wow, that's some
dedication and calls for a very difficult temperament and set of skills.

~~~
alphakappa
900+ million with 9000 employees means around 100,000 per employee. That
sounds a bit low for revenue per employee.

~~~
cjackson
I currently know of software engineers that have been working there for 1 and
2 years. Individually they are each making between 50k and 60k a year.

Don't need quite as much revenue when employees are cheaper.

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spoiledtechie
Ive met Jack and had conversations with him a few times. He is in the DC area
often since an office is out there as well as the government.

He is a humble go getter just like you would imagine Steve Wozniak. He doesn't
seem to talk about his money nor does he really care. What I have taken away
from our few talks is that he actually does care about the customer and thats
why I believe he keeps winning.

The software at version 1 was poorly written and sadly still poorly
maintained. But since 2005 or so, its been improving ever since.

Ps. They are hiring folks of all types in the DC area.

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useflyer
This parallels Warren Buffet's strategy of residing in Omaha to completely
avoid the influence of Wall Street hive-mind thinking.

There's something to be said for uninterrupted focus, whether its an
individual coding solo, or a business focused on steady growth.

~~~
fixxer
Sure... but again, consider their bread and butter client. While the Valley
has a large share of government clients (case in point, Palantir), they still
have to compete for sophisticated customers (basically, those that can code).

Esri caters to university, state & federal agencies (and military).

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xanadohnt
I've done a lot with both ESRI and the open source alternatives. I created
zigGIS. With that said, the side you dont read about is that Mr. Dangermond -
outside the ESRI compound - is generally considered a very cutthroat
personality. Often his success is more attributed to this than most anything
else.

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netcan
I was watching an architecture show yesterday where a rich artist couple were
re-purposing a barn as a house. It was a strange building for living in.
Unconventional and contrary. The show follows people through the build and
visits them after they've moved in.

At various point they seemed to be obsessed with concepts like _rooms_ and how
important they are for dividing up a house or walls and how useful they are
for putting furniture against, directional lighting in the kitchen, etc. All
these obvious things that come standard with a standard house and most people
don't think about were discoveries to them. They started by rejecting
everything until they begrudgingly let some of the things in or found
workarounds. The result was pretty cool.

We end up with big lists of rules about things, whether we are aware of them
or not. You can call them rules of thumbs or call them cargo cults. Either
way, there is value to be had from rejecting standards and then rediscovering
for yourself the ones that demand to be discovered. It's like a cleanup
process.

~~~
skilesare
Generative languages. See Pattern Language and Nature of Order by Christopher
Alexander.

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fixxer
I had to learn ArcGIS for a class. Ugh. That application brings new meaning to
"feature creep".

They make their money off people who can't "afford" open source (ie.
institutions & gov).

~~~
fixxer
When I worked for a billion dollar hedge fund, we used open source code and
hired great open source developers.

When I left and returned to academia, all I deal with is ArcGIS, Microsoft,
and Matlab. These are the tools you use when money is tight. Open source is a
luxury.

~~~
ww520
That actually is very insightful. We developers love open sources because of
the deep customization and the breeding edge they offer. Ordinary people can't
use them since they don't have the know-how. ArcGIS, Microsoft, and folks make
a killing catering to these people's needs.

~~~
nraynaud
I would say no in the case of geography. Qgis is a UI disaster as much as
Arcgis. Where you are right, is that they sell people to install it for you,
teach you, and very often, actually use the software for you (I have seen more
than once).

~~~
fixxer
I do most GIS viz through the browser (client-side scripting + PostGIS + ad
hoc servers). Took a while to get up to speed, but it feels so good being able
to scale projects quickly and not rely on Esri.

As for math, I generally keep it on the command-line.

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nickpersico
This article does not mention much about how they hit $912 million in sales.
However, the title made me furiously click on the article. So they've done
their job.

~~~
nraynaud
expensive, licences sold to the armies around the world. It's like Oracle for
geography: overbloated, expensive, you need loads of DVDs to install it, when
at last the guy you hired to install it is done, you can't do anything with
the GUI (assuming to clicked a .exe at random), because you need weeks of
training for a "hello world" equivalent.

~~~
mathattack
Welcome to "Best in Class" enterprise software. :-) It sounds like SAP without
a competitor.

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mathattack
I don't follow it. He seems folksy, but if "Not taking outside money, and
serving customers based out of a low cost area" were the path to $912 million
in Sales, wouldn't a lot more people be doing that?

~~~
msandford
If you saw a $100 bill on a busy sidewalk would you pick it up?

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mathattack
Yes, but I'm not sure what the connection to this is. My point is that what he
attributes his success to is also true of most companies that never grow.

~~~
msandford
You suggested (paraphrasing) that if it was such a good model, surely others
would be doing the same thing and making a killing doing it. What you
effectively said there, is that you believe that the market for company
management is an efficient market.

[http://en.wikipedia.org/wiki/Efficient-
market_hypothesis](http://en.wikipedia.org/wiki/Efficient-market_hypothesis)

There is a joke that says an efficient market economist is walking down the
street, sees a $100 bill on the sidewalk and doesn't stoop to pick it up. If
it were real, he says to himself, someone would have picked it up already.

I don't believe that there is necessarily an efficient market in management.
Nor do I believe that VCs, press coverage, parties, etc have no effect on many
company's strategies. The VC business model relies entirely on their ability
to purchase a certain distribution of company outcomes, what some might call a
"go big or go home" type of management. That's fine, I have no problem with
it.

But that doesn't mean it's the only way to run a company successfully. And the
author is trying to point that out.

~~~
mathattack
I was taking a statistics approach actually, rather than the efficient market
hypothesis.

For example: 20 people have a choice between X & Y. \- 10 people choose X, 1
succeed. \- 10 people choose Y, 1 succeed. The first person who succeeds says,
"It's because I chose X" Based on the data, you can't say that this choice is
what mattered, because many others made the same choice and it didn't help
them.

Perhaps I'm being pedantic about the title, but this is where I'm coming from.

And when I heard the joke it was $20, but perhaps it's the monetary phenomenon
called inflation. :-)

~~~
msandford
That makes a lot more sense!

I wonder what the numbers are between "tried not to take money" and "tried to
take money" are. On the one hand trying to take money gives you a lot of focus
and a short-term goal; getting enough traction to get investment. VC money
probably makes a lot of companies succeed short-term that might not otherwise.
Then on the other side of investment, VC money encourages a "go big" approach
where you need to grow gangbusters which most people interpret as hire, spend,
etc. Seems like that might actually kill some companies that might otherwise
be viable as they get over-extended and don't pare back fast enough, then go
broke.

~~~
mathattack
My intuition is that money is better when: \- There is some competitive
advantage to being first. \- That the advantage is enduring. \- There are lots
of competitors. \- It is important to fail faster.

For example, if you're trying to scale Google or a SaaS, and there is some
kind of "Winner take all" then you need funding.

Funding makes less sense when: \- You're selling a service directly linked to
people's time. (Consulting firms) \- You have other sources of money to carry
you through. \- The market is less competitive. \- People will take
significantly less money to get equity.

I kind of view funding like, "Do you need it bad enough to justify letting
someone expect 30+% returns?" If it's the only way to get great growth for
that individual company, great. If it's not needed, that's ok too.

In terms of measurement, there are two measures. "What % succeeded with and
without?" and "What was the median and mean with and without?" The funders are
more likely to be stacked in the huge winners and huge losers, because funding
(to use financial terms) increases the volatility.

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davidw
I'm more interested in how companies hit $10,000 or $100,000 in sales, and in
profits, on their way to become a "real company".

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mcculley
I'm all for bootstrapping and avoiding VC, but I get annoyed with these
proclamations that make all businesses sound the same. (I suspect it is the
writing at fault here as Mr. Dangermond probably doesn't think about business
so simply. Maybe he just means software businesses when he refers to "young
entrepreneurs".)

There are plenty of business models that aren't viable without lots of capital
early on. Tesla and SpaceX are good examples of companies that could not be
bootstrapped as they need lots of capital to actually build things and to
build the factories that build those things.

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gearoidoc
I read this and still don't know how to make $912m. What a rip off.

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PhilipA
The difference is that he built a lifestyle company, and not just one to flip
for $$$.

~~~
throwa
what makes it a lifestyle company with almost a billion in sales annually.
Facebook makes just about 4times over that annually at the moment.

Would you call Instagram, Yammer and Youtube that were all acquired for a
little over a billion dollars, lifestyle businesses?

Or except you raise venture capital, you a lifestyle business?

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swamp40
He's a little behind the times on the "going public" part, but I think it's
good to hear these things every once in a while.

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krob
for a while, I remember when ESRI was constantly hiring new people. The
problem is, it's in redlands, and redlands in way the heck out side of L.A.C.
or O.C.

~~~
caseorganic
While Esri HQ is in Redlands, there are an increasing number of R&D Centers
around the world. Portland, OR, DC, Scotland, Zurich and China all hire front
end and back end devs, UX and visual designers. While it was uncommon to work
outside of Redlands only a few years ago, there are more possibilities for
that now. This is a pretty recent development, though.

