Congrats to my friends at Rally Software on the announcement that they’ve signed a definitive agreement to be acquired by CA Technologies for $480 million.
Part of the fun of having a blog for a long time is that it captures some of the history – in the moment – of what’s going on. For example, from a post in 2008 about Rally’s $16.85m financing, I riffed on the origins of the company.
Rally started out life as F4 Technologies. I remember my friend Ryan Martens sitting down with me and Chris Wand around 2001 and walking us through his idea for changing the how he approached managing the software development process. I can’t remember if Ryan used the word Agile at that time, but I remember scribbles on a white board that listed out all the different software that Ryan had used at BEA to manage his dev team and how maddening it was to try to integrate information in Word, Excel, Project, a dev workbench, a set of testing tools, and the support / QA system. Ryan had a vision for an integration web-based system to layer on top of all of this to help support and manage the software development process.
We weren’t the first investor in Rally. Ryan quickly raised about $400k of friends and family money. We offered Ryan space to work out of our office which he did for a year or so as he got things up and running. About a year after he got started, he was ready to raise a venture financing. At the same time, his partner at his previous company – Tim Miller – was doing an entrepreneur-in-residence at a local Boulder VC firm (Boulder Ventures). Ryan was encouraged to team up with Tim and shortly after that happened we co-led the first round VC financing with Boulder Ventures.
It has been a rocket ship from there. Tim, Ryan, and team have created a phenomenal company that is built on two trends that have picked up massive speed in the past few years: (1) Agile and (2) SaaS. In 2003 – while Agile was known – it was largely limited to ISVs and a few leading IT organizations. SaaS was beginning to be talked about as Salesforce.com’s success (and leverage from the SaaS model) became apparent.
Or if you want to go back to 2004 and 2005 when I was really learning about Agile, well before it had become a household name, you could read my posts Agile Software Development with SCRUM or Do You Develop Software For A Living? – Get Agile with Rally Release 5.
Or maybe dip into the 2006 and 2007 time frame when Rally was in an award cycle with my posts Rally’s New Financing and the E&Y Entrepreneur of the Year Award and Boulder 2007 Esprit Entrepreneur Awards.
Over the fast dozen years, Rally has gone from a raw startup to a 500 person public company. Tim Miller (CEO) and Ryan Martens (CTO, founder) have been working together from the start of the journey. Jim Lejeal, the CFO, was an original angel investor, then board member, and then CFO joining full time when the company was around 200 people.
It makes me so happy to reflect on my relationship with each of Tim, Ryan, and Jim. I first met Tim when he had just started Avitek (his previous company) working in the same office space as Andrew Currie, who had just started Email Publishing (my first angel investment in Boulder.) I met Ryan via Young Entrepreneurs Organization – we were both in the same YEO forum. And I was the seed investor, via Mobius, in Jim’s second company (Raindance, which he co-founded with Paul Berberian – CEO of Orbotix and Todd Vernon – CEO of VictorOps.) But more importantly, I’m close friends with each of them, even though my direct involvement in Rally ended about two years ago when the company went public.
There are hundreds of paragraphs I could write about all of the amazing things Rally Software has done for the Boulder Startup Community and for the extended city of Boulder. But I’ll end with one of them – the creation of the Entrepreneurs Foundation of Colorado (now Pledge 1%). The story starts in 2007 with the founding of EFCO, which Ryan and I spearheaded and had a huge punch line in 2013 when Rally Made a Gift of $1.3 Million To The Boulder Community after their IPO. Ryan continues to head up EFCO and is co-founder of Pledge 1%, which is the effort to take EFCO international.
To the extended Rally Software family past and present – congratulations. You’ve built something very special that is part of the long arc story of Boulder. And – to Tim and Ryan – thank you for letting me participate in your journey.
My day started out great. After getting up at 5, having a delightful run at 6, walking Brooks, and then hanging with Amy for four minutes, I got in my car and drove over to Rally Software for their Big 1% Give Back event.
The picture to the left is of Ryan Martens, Rally’s founder and CTO, giving Josie Health, the CEO of The Community Foundation Serving Boulder County, a check for $676,000. This check is for The Community Foundation and for the Entrepreneurs Foundation of Colorado (EFCO) and results from a gift of 24,793 shares of common stock from Rally at the time of its first financing that represented approximately 1% of the equity of the company.
I remember numerous conversations with Ryan about this. Ryan started Rally (formerly F4) out of our previous office and could regularly be found scribbling all over a white board. He had a huge vision that started to be turned into practice when Tim Miller joined him as CEO about a year after he started the company. Part of that vision became the agile software development products that Rally makes.
But Ryan’s vision was always bigger than that. He wanted to build a sense of corporate social responsibility into Rally from day one. He was inspired by Salesforce.com and the Salesforce Foundation so he wanted to do something similar in Boulder – contributing 1% of the equity and 1% of the employees’ time to local philanthropic efforts.
With a handful of others, including my partner Seth Levine and Cooley’s Mike Platt, Ryan helped created the Entrepreneurs Foundation of Colorado. Rally was one of five founding members – the others were NewsGator, Collective Intellect, Me.dium, and Tendril. At the time, no one really knew how this would end up, but we all believed that it was important for the local startup community (which included companies anywhere in Colorado, not just Boulder) to give back to the community that helped support it.
We talked about creating millions of dollars of philanthropic contributions through the success of companies in Colorado over the next few decades. Some people rolled their eyes when we talked about this, some thought we were crazy, and some jumped on board. Throughout, Ryan’s leadership of EFCO was unbounded and today over 50 companies are members of EFCO.
Today’s gift represents the largest to date. Oh – that check is only for $676,000. Well the other one – for $643,000 – is the second check Josie got today – this one from an additional gift Rally made when they endowed the Rally for Impact Foundation.
Gang – well done. Thanks for leading by example. And we are only just beginning.
A few weeks ago I did an event with Built In Denver where I interviewed Tim Miller and Ryan Martens, the founders of Rally Software, on their journey from a startup to a public company (NYSE: RALY). As part of the event – held at Mateo in Boulder – the gang from Built In Denver announced they were rebranding as Built In Colorado.
The attendance at the event was roughly 50% Boulder entrepreneurs and 50% Denver entrepreneurs.
The past two days the Colorado Innovation Network held it’s 2nd annual COIN Summit. As part of it, Governor Hickenlooper rolled out a new brand for all of Colorado, an effort led by Aaron Kennedy, the founder of Noodles & Co. The focus was on Colorado, not on Boulder, or Denver.
Powerful startup communities start at the neighborhood level. They then roll up to the city level. And then cities connect. Eventually it rolls up to the state level.
It’s a powerful bottom up phenomenon, not a top down situation. And inclusive of everyone. This is one of the key parts of my theory around Startup Communities.
When we started Startup Colorado in 2011 as part of the Startup America Partnership (now Up Global), the first of our six initiatives was:
Export the magic of the Boulder tech community to Fort Collins, Denver, and Colorado Springs by expanding New Tech Meetups, Open Coffee Clubs, and Community Office Hours to these cities.
When I look at what is happening in Denver, and the connective tissue between Boulder and Denver, I’m incredibly proud of what has been accomplished in less than two years on this front.
When I see questions on Quora like Should I start my start-up in Boulder or Denver? and then read the answers, my reaction is “poorly phrased question” and “wrong answer!” It’s not an either / or – the two cities are 30 minutes apart. They are both awesome places to start a company. It depends entirely on where you want to live – do you want a big city (Denver) or a little town (Boulder). If you choose Boulder, when you reach a certain size, you’ll end up with offices in both like Rally and SendGrid.
I’m psyched that Built in Denver is rebranding to Built in Colorado. I’m going to spend most of the week for Denver Startup Week in Denver, and CEOs and execs from most of our portfolio companies are converging on Denver in the middle of the week for a full day session together.
You’ll note that we have deliberately named things like The Entrepreneurs Foundation of Colorado (EFCO) with “Colorado” in their name to be inclusive of all entrepreneurs in the state. And we we do things to celebrate the startup community, like The Entrepreneur’s Prom that EFCO and Cooley are putting on September 7th at the Boulder Theatre, we focus on the entire startup community.
Innovation and entrepreneurship is off the charts right now. Let’s make sure we work together to continue building a base for the next 20 years.
On Friday July 19th, I’ll be hosting Bill Aulet in Boulder to discuss his new book, Disciplined Entrepreneurship: 24 Lessons To A Successful Startup.
Bill, the managing director for the Martin Trust Center for MIT Entrepreneurship, is a close friend and amazing thinker on entrepreneurship. The book is a result of many years of his work and thinking on creating and scaling startups.
The event will take place at Rally Software in Boulder, CO from 9am – 12pm. Seating will be limited to 150 people which means you better get your tickets NOW!
Tickets are free and you can register for them on our Eventbrite page found here.
Bill’s book Disciplined Entrepreneurship is currently available for pre-order, but will officially go on sale August 13th.
I hope you will join us!
Jon Hansen has started interviewing me periodically on his show on BlogTalkRadio as part of his Thought Leaders Series. Yesterday’s interview focused on my experience of investing in Rally Software and included short discussions on how Rally got started, how and why I decided to invest, and the role various factors play in my decision making process. Jon does a nice interview.
I’m very proud of my friends at Rally – they’ve created a company that is well on its way to being one of – if not the – most significant software company in Boulder.
Lots of little things go into building a great company over the long term. Rally Software is one that I’m proud to have been involved in from the beginning. I remember when Ryan Martens, the founder, would sit for entire days in a small conference room near my office covering the white boards on the walls with his scribblings.
Today Rally is a 150 person company that plans to add another 75 people in 2010 on the heels of Rally’s $16 million financing led by Greylock. And – since their birth in 2002, Rally has had 17 babies (well – people that work for Rally have had the babies, but you probably figured that out.) Recently, Rally’s leadership team decided to do something about this.
Nicely done Tim, Ryan, and everyone else at Rally. Now you’ve just got to get these kids using software from Kerpoof at an early age. I wonder how Agile Parenthood works?
I’ve watched (and participated) with excitement as Rally Software has helped move the notion of agile software development into the mainstream over the past few years. In addition to having the leading Agile application lifecycle management solutions, they are tireless educators and evangelizers for all things Agile. Today, over 1500 companies are doing over 33,000 projects using Rally’s SaaS-based ALM software.
Rally has just announced their Agile Success Tours. The first one is in Denver on 3/18/09 followed by similar events in LA on 3/26/09 and New York City on 4/02/09. They are free, but you have to register for them.
Each event is a half-day and is aimed at software and IT executives and managers who are being asked to deliver software faster and with fewer defects. The event will focus on how development teams can adopt Agile practices to achieve the real and measurable results that today’s economic climate demands: faster time-to-market, improved productivity, and fewer defects.
In addition, Rally has recently launched an Agile Blog that is packed with information, advice, and suggestions about Agile and how to implement it in your organization.
If you aren’t familiar with Rally or Agile, take a quick look at their five minute overview or try out the free version of Rally’s Community Edition for up to 10 users. Come join the Agile movement.
Two weeks ago, one of the companies I’m on the board of – Rally Software – announced that they have acquired a company called 6th Sense Analytics.
I’ve been involved in Rally since the very beginning and it has been incredibly rewarding to see them grow from an idea that the founder/CTO Ryan Martens had to the market leader in Agile application lifecycle management. Rally updates quarterly their “by the numbers page” which gives a nice overview of the scale of Rally.
In Q4 of 2008 we started getting some inbound calls from other software companies that were in related markets to Rally. These calls were from companies that had developed significant software assets, but hadn’t really had much market success. In several cases they were companies that had worked with Rally; in other cases they were from folks that thought they might be complimentary to Rally.
In response, Rally’s leadership team identified a number of areas on their roadmap that they could accelerate (or bring forward) by acquiring a small company. They’ve used this to quickly decide whether or not it is worth spending time with the inbound inquiries they were receiving.
One of them – 6th Sense – fit great. Rally has a significant amount activity on their product roadmap in 2009 around development metrics and analytics. Rally and 6th Sense engaged in a serious discussion and within 45 days had closed an acquisition. Internally, Rally went through a detailed build vs. buy analysis; adding the 6th Sense folks to the overall team and incorporating their software into the mix was a no-brainer decision for us.
I’m seeing this pattern with a number of the established companies I’m an investor in. Having gone through this cycle several times and had success and failure with acquisition driven strategies, I’ve got a clear view on when and how it can work successfully. I’m not interested in garbage truck mergers (two crappy companies that get jammed together to hope something good comes out of it) – all of my energy is focused on having a market leader pick up a complementary technology or market “asset” that helps accelerate the product or market roadmap.
Look for a lot more of this in 2009.
Kevin Kelleher’s article on GigaOm this morning titled 2009: Year of the Hacker made me think back to the rise of open source after the Internet crash of 2001. In the aftermath of the crash, many experienced software developers were out of work for a period of time ranging from weeks to years. Some of them threw themselves into open source projects and, in some cases, created their next job with the expertise they developed around a particular open source project.
We are still in a tense and ambiguous part of the current downturn where, while many developers are getting laid off, some of them are immediately being picked back up by other companies that are in desperate need for them. However, many other developers are not immediately finding work. If the downturn gets worse, the number of out of work developers increases.
If they take a lesson from the 2001 – 2003 time frame, some subset of them will choose to get deeply in an open source related project. Given the range of established open source projects, the opportunity to do this today is much more extensive than it was seven years ago. In addition, most software companies – especially Internet-related ones – now have robust API’s and/or open source libraries that they actively encourage third parties to work with for free. The SaaS-based infrastructure that exists along with maturing source code repositories add to the fun. The ability to hack something interesting together based on an established company’s infrastructure is omnipresent and is one of the best ways to “apply for a job” at an interesting company.
We are thinking hard about how to do this correctly at a number of our new investments, including companies like Oblong, Gnip, and a new cloud-computing related startup we are funding in January. Of course, many of our older investments such as NewsGator and Rally Software already have extensive API libraries and actively encourage developers to work with them. And of course, there are gold standards of open source projects like my friends at WordPress and masters of the API like Twitter.
If you are a developer and want help engaging with any of these folks, or have ideas about how this could work better, feel free to drop me an email.