Last week Cisco bought Orative for $31 million, and it barely raised an eyebrow. Russell Shaw wants to know why! He rightly points out that Orative has some very cool features, and it’s a nice addition to Cisco’s bag of tricks.
So why did so many not comment?
From the publicly available data (and I will caveat this that there may be something I don’t know about here), for entrepreneurs, this looks like a sad story. The company raised a $6 million A round in 2003, and a $12 million B round in 2004. That means that the company was probably valued at $12 million in 2003, and in the neighborhood of $30 million in 2004. It looks like Orative sold for not much more than it was valued at 30 months ago.
For the employees, this is a possible scenario: the investors likely owned participating preferred shares, which means that they get to take their $18 million out first, leaving $13 million behind. Again, I’m speculating, but it’s likely the investors own 65% of the company, the employee stock option pool is another 20% and the founders stake is the remaining 15%. So the investors got another $8.45 million, all the employees split another $2.6 million, and the founders, after 5 years, receive a little under $2 million.
Not exactly a roaring success. The VC’s earned 46% in 5 years, which is about the rate that mutual funds pay.  The average employee probably earned a down-payment on a house. And the founders made the equivalent of 5 years of salary at a larger organization.
Orative’s key capability was pushing Cisco PBX features to RIM handsets. Orative, with a single strong partner in Cisco was a bit of a one trick pony. RIM’s acquisition of Ascendant earlier this year probably forced some soul searching at Orative.  RIM, via Ascendent, will be pushing Orative-like features to every PBX manufacturer. The writing was on the wall.
And that kids, is a lesson on why it pays to have a broad partnering strategy.Â
Alec Saunders is the Vice President of Developer Relations for BlackBerry make Research in Motion. This is his personal blog, with his personal viewpoints. Prior to this Alec was the CEO and co-founder of Calliflower — the easiest way to hold a meeting, online, on a conference call, or on the go. A double-decade veteran of product management and marketing, he spent nine years at Microsoft where he helped launch Windows 95, the first two versions of Internet Explorer, the Universal Plug and Play initiative, the push into home markets, opt-in email marketing and what might well go down in history as the very first direct email list ever.
