The planned sale of Concur to SAP for $8.3 billion is a blockbuster by any calculation. But the deal, which is expected to close around Dec. 4, didn’t grab the headlines like other big tech transactions.
After all, as Concur president Raj Singh readily admits, selling travel and entertainment expense management software is about as “unsexy as tube socks.”
Even so, Concur built a powerful and profitable business over the past 21 years — now employing 4,200 people worldwide.
How did the founding team — which has amazingly stuck with Concur over all of those years — make it this far?
Well, it wasn’t easy, and it took a series of “pivots” — radical transformations in which the founders rolled the dice on big ideas, some of which ran contrary to the conventional tech wisdom of the day.
Singh retold some of that fascinating history Thursday at the 9Mile Labs Cohort III Demo Day, an event featuring presentations by nine startup companies.
“The history of the story, I think is one of a series of pivots,” said Singh, who co-founded Concur with his older brother Steve and friend Mike Hilton. “We started building shrink-wrap software, and there are so many young people here that will annoy me with the fact that you don’t know what shrink-wrap software is.”
But Concur is so seasoned that it actually started out by selling its expense reporting software on 3.5-inch floppy disks, dropping that model in 1996 to focus on client-server software, selling to larger corporations. While that proved somewhat successful, Concur switched gears again a few years later, building its first web-based product.
“That was probably the one that we thought was going to carry us over the edge, but in fact it wasn’t,” he said. “The real thing, the last pivot, that fundamentally created our growth story was the move to the cloud. We had built web-based software, but we were selling it like enterprise software where you had to install it internally.”
In 2001, Concur made the switch to the cloud, at what Singh described as the “bottom of the bottom of the tech crash.”
“A lot of people didn’t care about our business,” said Singh.
At the time, Concur — which went public in 1998 — was valued at just $8 million.
It was a huge risk to shift to the cloud that early, and Singh recalled that some industry luminaries like Larry Ellison of Oracle were saying that no one would be able to make money on cloud-based applications. But the change was necessary, in part because the previous incarnations of the business just weren’t taking off as rapidly as the entrepreneurs hoped.
“We stuck with the original idea, but we had to be willing to change,” said Singh. “Along the way, we made plenty of mistakes, but the willingness to change, and the willingness to bet on that change and the willingness to believe in what we thought was right because we knew our customer well, was essential to being able to build the company.”
Singh said Concur was successful in the transformations because it was never thinking about a quick exit, instead always striving to build a great company with big aspirations. There were internal fights during those pivots, but Singh said many of those battles were “super constructive” and the founders got to a point where they could disagree one day, and move on the next. What always stood in place was Concur’s values — with Singh saying that the “differentiated value of our company is the culture of our company.”
“Think about it as building a company that will last forever. Build that company,” said Singh, offering advice to the nine entrepreneurial companies in the 9MIle accelerator. “Plan that way, and if you build that way, you are going to build a great company.”
It also didn’t hurt that, at the time, Concur’s market value was so low. In other words, they didn’t have much to lose.
“We bet on it, totally based on the idea that our customers were telling us what they wanted, and nobody knew this particular space — Larry Ellison knows databases better than anybody in the world — but he doesn’t know anything about expense reporting. We thought: ‘We are right, he’s wrong.’ And, if we were wrong, then the worst thing is that we have to fold up shop. But if we are right, we have a shot. We had an incredible amount of conviction that we knew this better than anybody. And as long as you know your space and your customer better than anyone else, I think you are in a decent spot.”