When Pleasanton software maker Workday goes public this week, it will mark more than the most anticipated tech-stock debut in months: It will represent a measure of vindication for co-CEO Dave Duffield.
Duffield was forced to sell his previous company, PeopleSoft, to Oracle’s (ORCL) Larry Ellison in a bitter and highly unusual 2005 hostile takeover. Now, with enterprise software makers like Workday having revived an IPO market that fell into the doldrums after Facebook’s flop, the 85 million shares Duffield owns would be worth more than $2 billion at the top of the company’s proposed share price range.
It’s enough to make a 72-year-old chief executive all warm and fuzzy inside.
Duffield, to be sure, wasn’t hurting for money when he started Workday seven years ago. When Oracle finally wrestled PeopleSoft to the ground after a lengthy and uninvited courtship, Duffield — who had founded the human resources software maker and was its biggest shareholder — walked away with more than $600 million.
And Duffield was already a billionaire before that. Having started PeopleSoft on a shoestring in 1987 after two previous startups and a stint at IBM, he had retired to a palatial spread on Lake Tahoe before returning to the company’s helm in the heat of the Oracle battle.
Duffield declined through a spokesman to comment for this report, citing federal “quiet period” rules for companies that are about to go public. Those who’ve tracked his career, though, say he’s never been motivated by mere dollars.
“A fish has to swim, a developer has to develop,” said Bruce Daley, a cloud computing consultant with Great Divide Research in Denver who previously edited the industry newsletter The PeopleSoft Observer. And Duffield, Daley said, throughout his career has been driven by a desire “to make the world a better place, to take the drudgery out of work.”
Duffield has been called the tech industry’s Jerry Garcia: An avuncular type prone to wearing Hawaiian shirts and signing corporate memos with his initials, DAD. He was known to join PeopleSoft employees at beer bashes and once jumped out of a cake at a trade show. He didn’t just encourage folks to bring their dogs to work; he set up a $100 million foundation to spare stray animals from being euthanized.
After Oracle finally consummated its 18-month pursuit of PeopleSoft, Duffield put aside millions of dollars to grant laid-off employees $10,000 checks for medical bills or other expenses.
And within two months, he and Aneel Bhusri, who had been PeopleSoft’s vice chairman during the Oracle drama, had founded Workday, backed by many of the same investors.
The idea, not surprisingly, was to sell human resources software, as PeopleSoft had done. But the delivery platform was entirely different: Renting the software over the remote server architecture known as the cloud, rather than making customers buy expensive licenses and suffer through lengthy installations.
The shotgun marriage to Oracle “was a bitter end of what was a fabulous company, and I think that — combined with this unique replatforming of the software industry — created this opportunity,” said Byron Deeter, a venture capitalist at Bessemer Venture Partners who has done deals with Bhusri.
The bet has paid off handsomely. Cloud computing is now perhaps the hottest trend in enterprise software; Palo Alto Networks, Guidewire Software and Qualys are among Bay Area cloud companies that have gone public this year in soaring fashion.
The more than $500 million Workday seeks to raise, Deeter said, will be the biggest-ever stock offering by a cloud computing company, and the largest market debut by a tech company of any kind since Facebook’s.
The company — which has yet to turn a profit — is expected to begin trading Friday on the New York Stock Exchange under the symbol WDAY. It’s putting nearly 23 million shares on the market.
“But there’s no doubt in my mind that this isn’t about money,” said Daley, the analyst. “You build up something you think of as your legacy, and you’re forced to leave it in someone else’s care, and you can’t save it — there’s a lot of negative emotion tied up in that.
“You can almost see this,” Daley added, “as good vs. evil: Larry Ellison, prince of darkness, vs. David Duffield, the white knight.”
To which former PeopleSoft CEO Craig Conway says, nonsense.
“It’s just not in his character” to be driven by revenge, said Conway, who since being forced out of PeopleSoft shortly before the sale to Oracle has served on the boards of Guidewire and cloud pioneer Salesforce.com.
And though Conway and Ellison’s mutual dislike was one of the prominent undercurrents of the takeover drama, Conway said he “never heard Dave invoke Larry’s name.”
While he said he doesn’t speak frequently with Duffield, Conway recalled an interview his former boss gave a few years back in which he said starting Workday wasn’t an attempt to right past wrongs. “He said, ‘I wanted my kids to see me leave in the morning and go work,’ ” Conway said.
Agreed former PeopleSoft board member Mike Maples Sr.: “I don’t think it was hostility driven at all. I think it was opportunity driven; they didn’t think Oracle got it.” An Oracle spokeswoman declined to comment for this report.
Ironically, PeopleSoft’s forced acquisition may have freed Duffield and Bhusri to deliver software over the cloud. It would have been difficult, Conway and Daley said, to have switched PeopleSoft from its legacy revenue base to a cloud model, which relies on recurring subscriptions.
Both men also say an important lesson Duffield learned from the Oracle drama was to prevent others from controlling his destiny: According to Securities and Exchange Commission filings, Duffield and Bhusri each take only $35,000 a year in salary but oversee more than 60 percent of Workday’s voting stock.
It’s the same reason Daley thinks Duffield won’t hand over the reins and re-retire to Tahoe after the company goes public.
“He learned from his mistake,” Daley said. “It’s a labor of love, and he’s not going to relinquish his beloved.”
Contact Peter Delevett at 408-271-3638. Follow him at Twitter.com/mercwiretap.
DAVE DUFFIELD
Source: Mercury News.
WORKDAY BY THE NUMBERS
Source: Mercury News; PrivCo.
