How does a barely-out-of-the-gates start-up get on a first-name basis with such towering technology corporations?
By being brash, to start. "I'd be surprised if Steve Mills, our chief contact at IBM, didn't say that we were incredibly obnoxious when we started talking to them," says William Blundon, vice-president of marketing. "We treated IBM as an equal, and we were far from that."
The IBM deal came after a number of corporate alliances were already in place. But the story of how that relationship developed is representative of Object Design's style. It is a story of aggressiveness, timing, well-tended early contacts -- and patience, lots and lots of patience.
"Our management team was off-site for a planning meeting down on Cape Cod in June of '92," says Marshall. "And we got an urgent fax from one of our sales guys, who'd just gotten wind of a major deal that was going to happen between IBM and one of our competitors. The deal was, according to him, a fait accompli, but he had gotten through to somebody on the IBM management team and arranged an audience the following Monday -- this was on a Friday." (Object Design was still smarting from having missed out on a relationship with Digital Equipment Corp. [DEC], which had aligned itself three years earlier with a competitor. "It was particularly galling to us," says Marshall, "because the competitor was a West Coast-based company, and we were 20 miles down the road from DEC. Our founder had even come from DEC.")
Over that June weekend, the group abandoned its original agenda. Instead it headed out to IBM's Santa Theresa Lab, in Coyote Valley, Calif., on Sunday night for the Monday meeting. "We met with a group of about 10 decision makers," says Marshall. "They were looking to form a strategic partnership with an object-database vendor. At the end of the meeting they told us, 'Nice try, but a little bit late.' We spent that week trying to figure out how to get back in there." Pleading its case by phone, the team was able to get a one-hour meeting the following Monday. On that same day, the IBM group recommended Object Design for the contract.
The triumph was particularly sweet for Marshall. "The CEO of the company that didn't get it used to be my boss at Oracle," he says. "When I first ran into him at a trade show after joining Object Design, he said, 'Boy, I really feel bad for you because you have kids.' I said, 'Yeah?' And he said, 'I don't know how you're going to send them to college.' So it was a nice personal victory, to put it mildly."
The initial agreement, though, was just a start: the real work took place in stages over the next six months. Eugene Bonte, the vice-president of strategy and tools, took on the negotiations full time for four months, as did an Object Design sales rep, who worked on what became a series of contracts. Every week, Bonte would travel to IBM sites with his laptop, sit in different people's offices, and work on a joint business plan. "We were working on Macintoshes, and they didn't have Apple laser printers, which meant we had to go to the local copy shop to print things," says Bonte. "The deal had a lot of moving parts, and we discovered you had to put everything in writing just so everyone could follow it."
At the same time, Marshall was talking to other companies that had formed partnerships with IBM to get their advice; Object Design also worked with Forrester Research Inc., a technical-research firm, to get an outsider's perspective on the industry.
The negotiations were mind-boggling; there were about a dozen separate contracts to execute, ranging from deals for equity investment and exchange of intellectual property to internal licensing agreements and templates for how to do joint development. Says Marshall: "We'd go to a meeting, and it would be me and our sales rep and our attorney, and 25 or 30 of them." That caused trepidation in and of itself: would everything the two companies did together require six levels of management and a battalion of legal toadies? Marshall had pangs of anxiety. "I was not interested in becoming roadkill on the IBM highway," he says.
Essentially, though, the negotiations went smoothly. "You work with calculators for a while, then you talk; you go calculate some more, and you talk," says Steve Mills, the general manager of IBM's $2.8-billion software-solutions division. "Ken and I agreed that our working relationship had to be grounded in a mutual focus on the technology and how we can leverage the technology."
IBM also was kicking in money (around $27 million), which gave it an undisclosed equity stake. (Seven corporate partners own a total of 30% of Object Design, and IBM's share is the largest.) And last year IBM ramped up the business it was doing with Object Design to between $5 million and $8 million worth.
It had been the "sales call of a lifetime" back in June 1992. On April 27, 1993, Object Design announced the alliance to the public.
"It was almost anticlimactic," says Marshall. "With small companies, a lot of times when you do a financing deal you work so long and so hard that by the time you get to the end you're just kind of sick of it and glad it's over." The impact, though, was huge. "This was at a time when we were ahead in the market," says Marshall, "but only slightly ahead."
