Amid Worsening Economy, Software Startups Look to San Diego’s DaggerBoard Advisors for Different Kinds of Help
Dennis Clerke says the kernel of the idea behind DaggerBoard Advisors formed in his mind years ago, while he was still the CEO of Cardiff Software, a business in Vista, CA, he co-founded to automate business forms processing.
“When I was CEO, I’d just get parts of my board members’ time and attention,” Clerke told me. “I remember thinking, ‘I wish I could get more of that time and competency in a more sustained fashion.” After Clerke sold Cardiff Software in 2004 for a reported $50 million, he stepped into another software CEO job. But when that company was sold in 2007, Clerke founded DaggerBoard Advisors to provide the sort of executive advisory services he had once yearned for himself.
Several other former San Diego area software CEOs joined Clerke to found DaggerBoard: Emmanuel de Boucaud, who was a senior sales executive at Cardiff and the CEO of Chatstat Technologies, a Web 2.0 startup; Marc Friedmann, the former CEO of Syntricity and founding CEO of Prisa Networks; and Pamela Coker, who co-founded Acucorp, a software company founded to help customers modernize their COBOL-language computer programs, and which sold two years ago for $50 million.
As you might expect, DaggerBoard specializes in providing its services to software companies. When I met with the firm yesterday, Clerke told me all four members of the team have been through the process of starting, funding, growing, and selling a software company. So they have the range of experience sought by software startups, as well as more mature companies with annual sales of $5 million to $20 million. But Clerke says the key to understanding their business is in the firm’s name, which sailing enthusiasts instinctively understand. “A daggerboard is what keeps you on course,” Clerke says. “It’s the whole idea of an insertable keel,” a metaphor that explains the type of drop-in executive services the firm provides.
What was most interesting to me, however, was when DaggerBoard’s principals explained how their work has changed in the two years since they founded the business.
Clerke says roughly 60 percent of the startup software companies that initially came to DaggerBoard were looking for help in getting venture funding, or in sprucing up their businesses so they would be ready for venture funding. They also were seeing a lot of company founders who were saying, “We’d like to sell our business in the next two-to-three years, and what do we need to do operationally to do that,” Clerke says. But lately, about 70 percent of the companies are in bootstrapping mode. Instead of seeking help to find funding, they’re instead looking for interim management services because they don’t want to hire full-time employees.
“There are some pockets of technology that are still doing very well,” Clerke says, such as companies that specialize in cloud-based data storage that helps customers save money by avoiding the cost of building their own data centers.
For these companies, DaggerBoard steps in to help CEOs with particular projects, such as developing pricing and sales models.
Occasionally, DaggerBoard still helps some early stage software companies find alternative sources of funding. Friedmann noted that some companies are also “trying to position themselves for the government’s economic stimulus money.”
Lately, though, much of the business stems from software companies struggling with manifestations of the poor economy. Very few venture capital firms are investing money in software startups these days, but Clerke says in some instances, VC firms are hiring DaggerBoard to help evaluate the viability of the companies in their investment portfolio. VC firms also are retaining DaggerBoard’s services if a portfolio company is going sideways, and they’re trying to decide whether to retain the CEO. “I evaluated an entire executive team,” Clerke says, “and decided who the keepers and the throwbacks were.”
DaggerBoard’s four principals have worked with 25 software companies so far, with an engagement typically lasting two to three months. Friedmann says he’s an exception; he’s been working for nine months as the interim CEO of SciVee, a YouTube for scientists, and De Boucaud has been working on a yearlong assignment as the sales and marketing executive for an unnamed Internet monitoring company.
DaggerBoard’s business model has been successful enough that Clerke says he’s considered replicating it in other regions. The firm also has fielded lots of inquiries from former software industry executives in Silicon Valley and elsewhere who like the idea of joining the firm and want to know if DaggerBoard has an on office in Northern California. But Clerke says too many former CEOs seem to view it as a pastime between rounds of golf. As he put it, “Our model requires engaged CEOs who are still passionate about building a software business.”