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EDITORIAL: Interactive sale to stoke startups

Deal brings uncertainty, opportunity

September 3, 2016

When a prominent central Indiana company sells, the knee-jerk reaction is a sense of loss. Locally based companies tend to be especially immersed in the community—supporting everything from the United Way of Central Indiana to local sports teams—and their top brass typically earn big paychecks, substantially larger than those of fellow executives who run outposts of companies based elsewhere.

But we’ve come to recognize that company sales also stoke what the tech crowd calls our entrepreneurial ecosystem. Everyone from the CEO to rank-and-file workers with stock options suddenly have newfound wealth, which many plow into upstart companies. Others decide to launch startups, bringing with them invaluable experience.

We’ve seen that to a staggering extent among alumni of ExactTarget Inc. since the firm’s $2.5 billion acquisition three years ago by San Francisco-based Salesforce.com.

We hope to see a replay now that central Indiana’s other publicly traded software company, Interactive Intelligence Group Inc., has agreed to be acquired by Daly City, California-based Genesys Telecommunications Laboratories Inc. for $1.4 billion in cash.

The deal between two of the largest players in the call-center-software market, announced Aug. 31, is the latest feather in the cap for serial entrepreneur Don Brown, 60, who helped found two other Hoosier software firms before launching Interactive 22 years ago.

Brown won’t be sticking around Interactive. He has an insatiable appetite to learn (he’s currently working on a master’s in biotechnology from Johns Hopkins University) and create. “I’ve got other things in mind so I am kind of anxious to move on,” he told IBJ’s Jared Council.

It seems likely Interactive’s 2,300-person workforce has a solid future post-merger. One of Genesys’ motivations for buying Interactive, after all, was its leadership position in cloud-based call center software—a product line missing from the Genesys portfolio. Genesys CEO Paul Segre told IBJ that Interactive’s 1,000-person Indianapolis office will become Genesys’ largest location.

Still, there’s no way to predict the outcome with certainty—a reality demonstrated by what transpired at Software Artistry Inc., a company Brown founded in 1998 that was acquired by IBM for $200 million in 1997.

It sounded like a great growth opportunity for the company and employees. But IBM ended up unloading the division that included Software Artistry to a San Diego firm for $105 million in 2000, and the 200-person Indianapolis office soon closed.

Other acquired companies, of course, have prospered, with ExactTarget being just the most recent example. The local division, now known as the Salesforce Marketing Cloud, announced this summer it would add 800 jobs in Indianapolis by 2021 and will rechristen Chase Tower as Salesforce Tower.

That’s the nature of business—there always will be winners and losers. Fortunately, once the $1.4 billion all-cash sale of Interactive closes, there will be a deluge of new wealth in the city, some of it flowing into the prospective tech stars of tomorrow.•

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To comment on this editorial, write to ibjedit@ibj.com.

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