PENCIL PUSHER
Ariba's humble chief executive, Keith Krach, underlines his collaborative approach.
By Constance Loizos
The Red Herring magazine
July 1998
redherring.com
Before we arrive at Ariba Technologies' Sunnyvale offices, the company's CEO, Keith Krach, explains that he's uneasy about being singled out for our top-entrepreneur distinction. Telling his story makes him, "well, a little uncomfortable."
It's only mildly surprising, then, when we enter a conference room and find Mr. Krach flanked by five men who he declares are all cofounders of Ariba, the two-year-old procurement software startup that's running roughshod over later entrants to the space. By putting procurement systems online, Ariba is automating direct-from-supplier purchases of mundane things like pencils and paper clips. The company has already secured Advanced Micro Devices, Cisco Systems, and Visa as customers, and the market it's penetrating is enormous. The Giga Information Group estimates that $250 billion is spent annually on the routine procurement of office supplies. Ariba's revenues were nearly $23 million last year.
Just this morning, Ariba vice president of sales Rob DeSantis has signed FedEx as the company's newest customer. After introducing the drowsy Mr. DeSantis as the seventh cofounder--joining Boris Putanec, Edward Kinsey, Bobby Lent, Paul Hegarty, and Paul Touw--Mr. Krach encourages the men to speak freely about themselves. Instead they spell out why Ariba couldn't have gotten started without him.
Mr. Krach was working at Benchmark Capital in Menlo Park when he first focused his attention on the Internet and electronic commerce. He had joined Benchmark in 1996 in response to entreaties from Bob Kagle, a general partner at the venture capital firm.
Mr. Kagle had been impressed that Mr. Krach, who began his career at General Motors, had become GM's youngest vice president ever at 26 and, in his next position, as chief operating officer of a mechanical design automation software company, had played a key role in its $200 million sell-off. So Mr. Kagle wanted to be within earshot when Mr. Krach decided what venture he would embark on next.
As fate--with a push from Mr. Kagle--would have it, Mr. Hegarty was exploring opportunities in e-commerce in a Benchmark office opposite Mr. Krach's. Mr. Hegarty, who had previously headed up engineering at Next Software, had been recruited as Benchmark's technology expert. He and Mr. Krach decided to form an enterprise systems company together.
Soon they were introduced to Mr. Lent and Mr. Putanec by John Mumford of Crosspoint Ventures. Mr. Mumford had been working closely with Mr. Lent and Mr. Putanec at Crosspoint, where the two had hatched a concept for business-to-business procurement services. Excited by their ideas and friendly with Mr. Kagle, Mr. Mumford quickly summoned all of the men to an office at Benchmark. In the course of a discussion in early September 1996, Ariba was born. Benchmark and Crosspoint immediately poured a collective $5.5 million into the startup (Ariba's most recent financing round valued it at $120 million).
Back at the Ariba conference room, Mr. Krach says that "the company with the best people wins." Although he has yielded the floor to his cofounders this morning, he wants to ensure that we've gotten a sense of his team's dynamic before we shuffle toward the door. "Around here," he says, "you'll see some belly laughs, some high fives, a little cussing. There's passion coming from these offices!"
Given Ariba's quick success, it's understandable that its cofounders are feeling exuberant. Nevertheless, Mr. Krach, having grown visibly self-conscious, wishes us well and disappears. But first he thanks his cofounders for their time.
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