Vincent C. Smith, chairman and CEO of Quest Software, may figuratively be the archetypal athlete of the business game currently playing on the Quest team. His individual skills have been recognized in numerous ways including listings in Forbes' 100 Highest Rollers (2000), 400 Richest Americans (2001, 2000), America's Most Powerful People, 800 Best Paid CEOs (2000), Richest Under 40 (2001) and World's Richest People (2001). Smith's past and current accomplishments are testament to his other desirable athletic characteristics of drive, stamina, team spirit and internal motivation, healthily balanced by the ability to be externally motivated. Additionally, he has the nickname Vinny. In the meritocracy that is Quest, all employees play with the same enthusiasm, and Vinny loves the game.
The team stats are as follows: Quest Software, the leader in application management, provides solutions that maximize the availability of critical custom and packaged business applications while providing immediate return on investment. Notes Smith, "Every company has a number of applications that run the business, and Quest software and its products drive performance, increase availability and lower the cost of managing systems."
Relating how the Quest team believes in playing smarter, not harder, Smith continues, "By focusing on both the people and technology that make applications run, Quest Software enables IT professionals to achieve more with fewer resources." Quest's comprehensive offerings surround today's leading applications and the underlying databases that support them with solutions for: database development and deployment (such as TOAD), application performance and availability (such as Foglight and SharePlex), Microsoft infrastructure management (such as FastLane) and enterprise information management (such as Vista Plus).
Smith's figurative athletic history, the beginning of his quest, might be traceable to his university years perhaps constituting his varsity stint. While a student at the University of Delaware, Smith and a classmate cofounded a small software consulting company. "We built some systems that ran the taxis and the shuttle services in Philadelphia and Wilmington as well as some accounting systems for local furniture remarketers and a grain company which were relatively small businesses," says Smith.
When Smith graduated in 1986 with a major in computer science and a minor in economics, he went "pro," accepting a position at Oracle. Within five years, he became a group director in their U.S. sales organization. Smith asserts, "Oracle is an unbelievable place to learn the business. My tenure at the company was similar to a college education 10 times over I was there for five years, and it was a great degree."
In 1992, Smith left Oracle. As a free agent of sorts, along with an associate from Oracle, he founded Patrol Software, which developed a product that monitored Oracle database environments. Two years later, the partners sold the company to BMC Software, at which time Smith moved to Houston to assist BMC with the transition essentially making a trade that would launch his current career.
No longer a rookie, Smith came to Quest as an investor and director in 1995. At the time, Quest had 25 employees and approximately $4 million in revenue. Smith explains, "I was offered a small venture-capital company, Insight Capital Partners, which is now known as Insight Venture Partners. This was actually the first investment I made other than starting Patrol and it was very rewarding. The venture firm has since become a very large firm with more than a billion dollars under management, and my two partners still run the firm." As most athletes are less than content to deal only in theory, Smith admits, "My heart, however, was in operations. I wanted to see if, with a management team, we could create a company of real strength that cared well for its employees. Consequently, I ceased VC operations in 1996 and began at a full- time operating company." Smith became CEO of Quest in 1997 and chairman of the board in 1998.
To provide historical perspective, Smith reveals that Quest began in 1987 as a systems management company. "Since then," Smith continues, "the company has transitioned from its roots in the mini-computer one of the lines of HP to the new markets. Ninety-five percent of Quest revenues are now in the new markets surrounding the more modern application platforms of Oracle, UNIX and Windows 2000. Approximately six years ago, we began transitioning the business in earnest to cover these new markets, and the company has rocketed from approximately $5 million in sales to $270 million in sales. Over the past six years, we've experienced very healthy growth."
Quest, however, has been somewhat distinguished in its growth, supporting the notion that winning teams are a combination of coaching and talent. According to Smith, "We have retained the characteristics we had as a small company because we value those characteristics. We have incredible support I hear this all the time from our customers. Occasionally, support is lost or degraded as a company grows; therefore, we are proud of our customer support," says Smith of the Quest defense. Not to neglect the offense, Smith continues, "Additionally, Quest still attacks difficult challenges. We address really difficult problems that you can't solve if you're rushing product development. We're willing to do those things and take that challenging path. That's why we have products that have absolutely no competition. No other companies are willing to attack these problems because the difficulty of the problems is so immense. We will keep the quality of the support and our desire to solve difficult problems in place as we have done thus far in scaling our company."
"There is currently a serious slowdown in technology spending across the board," acknowledges Smith, even though the Quest team is still playing, undiscouraged, as though the score was zero-zero. "I think this slowdown is going to be difficult, but I think we'll be a much better company because of it. The slowdown will allow us to grow more slowly than we have recently, enabling an even greater focus on product quality and ensuring that we have a staff we're investing in. We're a company with a complete solution a family of products around key applications that solve a business problem. With more than 600 engineers, we invest more than 20 percent of revenue in R&D consequently, we're a vendor that's going to be around for many years. We're going to surround new market applications, make them perform better and make sure they're available continuously," says Smith, providing a glimpse into the Quest playbook.
As for the Quest game plan, Smith explains, "Gartner produced a study which revealed that 80 percent of outages are due to failure of the software or application. When I read that statistic, it hit me that customers were spending billions of dollars on redundant servers, redundant hardware and redundant networks, and only addressing twenty percent of the current outages. Consequently, the vendor that creates the solutions that make the software more sturdy the entire stack, all the way through the application so they can failover and make the operators more capable of managing the system will have a chance to address 80 percent of the outages. Additionally, the Web has lowered the cost and enabled Web-based applications that are available to everyone, thus creating an explosion of applications. This explosion of applications is causing issues around performance and availability, and the cost to manage these applications. We address both with our solutions." Smith calculates, "If there's a billion-dollar opportunity for the hardware guys, there's probably a like opportunity for the software guys so I'm comfortable in our market opportunity."
In their hypothetical pre- game strategy and film sessions, Smith indicates, "We're trying to determine the most critical applications in a company. Perhaps it's a system such as SAP running on top of an Oracle database. Perhaps it's a Siebel CRM solution running on top of a DB2 or an Exchange e-mail system running on Windows 2000. These are the applications that run companies. We believe there's an unbelievable market opportunity where we can drive down the costs of these applications, make them more available and better-performing. We don't have a need inside of Quest to seek out new markets. This doesn't mean there are not new products and new areas in which we should invest, but the focus of the company doesn't have to change for us to be a very strong growth story."
Smith is cognizant of the importance of management nutrition. He maintains, "There are two sides to managing a company. One is what you do for your customers. This is measured by your prominence in the industry and the way that thousands of companies use your products to solve difficult and challenging problems. We work to do this every day. We can measure our conduct in this area by our revenues and profits and our number of customers. We've made huge strides in this area in the last few years, and I'm proud that we are becoming a prime-time vendor for customers." Quest is on the scoreboard.
According to Smith, the roster is also a key management component. "The other side of management is the company culture. We've been able to create a culture that is full of great people, and we've been able to drive this company through both good and tough times. Many Quest employees, myself included, believe our culture will withstand tests and recessions very easily. We have seasoned, professional people. In the Bay area, we saw many young companies emerge with immature management and the people didn't bond. We have outstanding people who have high expectations in the quality they bring to their customers. We have caring professionals who take a lot of pride in the people who work for them and a great deal of pride in the company itself, making it a great place to work. We have a high level of capability and a common goal, which in concert creates much success. We also have a very friendly relationship between management and employees and we don't have a lot of turnover. At the same time, we strive for absolute on-time delivery. We have a culture of commitment," says Smith.
As many professional athletes are associated with charitable causes, the Quest team is also philanthropic. The comfortable relationship between management and staff is evident in the informal internal methodology the company has developed for charitable giving. Smith explains, "Quest employees identify charities or present charities to which they contribute. We, as management, match and multiply employee donations. By doing this, we are able to contribute to a variety of charities, and the contributions are very meaningful. This is the first year we've gone down this path, and it allows us to be flexible in our donations especially given the September 11 crisis for which we conducted a drive."
As additional tangible evidence that he's still making the plays, in July of 2000, Smith recruited Ron Farmer to open Smith Harbor Ventures as a $30 million Atlanta-based venture fund to invest in early-stage enterprise software companies. "I love the game in this business, and the game encompasses many elements. I mostly enjoy the creativity and the competition. Can you create products for your customers that provide real value? Can you solve important problems for your customers and help them manage their business? Can you create wealth and share it with your employees? Can you be the leader of a company such as this? These elements together fulfill a part of me that would otherwise be void."
QUEST FACT TABLE
Year Founded: 1987
Publicly Traded: NASDAQ: QSFT
Number of Employees: 1,800+
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