Sanjiv Sidhu was catching up with a former client recently when he revealed one of the qualities that made him, at least for a while, Texas’ second-richest man.
“We were talking about corporate boards and he asked me what board work I found most energizing,” recalls Salvatore Miraglia, retired president of the Timken Co.’s Ohio-based steel business.
When Miraglia mentioned an organization involved in biomimicry–the design and use of systems modeled on biological organisms—Sidhu was more than well-versed in the emerging field. “He was knee-deep in it, which shows how wide-ranging his interest are,” Miraglia says. “Anything that can give him insight, he’s interested in. He’s more than a student of management. He’s a student of life. I think the only thing that holds him back is the amount of time in a day.”
Sidhu came to prominence in Dallas and beyond in the late 1990s with the success of i2 Technologies, the enterprise software company he started in 1988 in his Garland apartment. Corporate giants such as General Motors, Procter & Gamble, Nike, and Samsung became clients of the company’s innovative supply chain software, a planning and scheduling application used to eliminate inefficiencies.
The company’s moon-shot stock price landed Sidhu on the Forbes magazine list of the richest people in American, where he took his place among the country’s most successful tech moguls. At the height of the tech boom in 2000, his estimated net worth topped out at $6.5 billion, ranking him second only to Michael Dell among Texas billionaires.
For a time, with i2 stock trading at 500 times earnings, Sidhu was the “software savant,” the tech “wunderkind.” His neatly cropped beard, wire-rimmed glasses, and professorial visage were everywhere in the Texas business press. The company grew in just five years from 330 employees to 5,000 while revenues grew more then tenfold in four years, hitting $571 million in 1999. Then, the tech bubble burst.
By 2003, Sidhu’s name had disappeared from the Forbes list, and a series of troubles befell i2 headquarters. Beyond a plunging stock price came years of financial losses, job cuts, withering competition from software giants like SAP and Oracle, executive turnover, earning restatements, and, perhaps worst of all, a Securities and Exchange Commission accounting investigation. In 2004, the commission accused i2 of misstating nearly $1 billion in software licensing revenue over the previous five years. That resulted in the company paying a $10 million civil penalty but admitting no wrongdoing. The commission later sued three i2 executives—Sidhu was not one of them—for securities fraud.
Sidhu left i2’s management in 2005 and the company board in 2009, but retained his 25 percent ownership. In 2010, a competitor, Arizona-based JDA Software Group Inc., acquired i2 for $604 million.
“I always say, ‘Who God wants to punish, She first gives a lot of success,’” says Sidhu, who sat down for an interview in the conference room of an office suite in Farmers Branch. The minimally decorated space is home to Sidhu’s second act, called o9 Solutions. He co-founded the company in 2009 with former i2 colleague Chakri Gottemukkala, who serves as president and CEO.
Although Sidhu never had a good explanation for what i2 stood for, he has a ready answer when it comes to his new company’s name: “It’s optimization to the highest number,” he says. The startup, which employs 65 people split between Texas and an office in Bangalore, India, has developed and is marketing integrated business planning software designed to help managers make more informed decisions about resource allocation, investments, and other strategic initiatives.
The company rose out of a problem that Sidhu saw. “At its peak, i2 was almost $800 million in revenues and more than 5,000 people, and the problem I had running the company was I had no visibility,” Sidhu says. “I wanted to bring my cellphone out, bring my computer out, and know exactly what was happening: what sold yesterday, who is doing what, where do we have market opportunity. As a field commander you need tremendous visibility on not only where your troops are, but what is happening in the battle and what are the enemy’s tactics.”
He says he talks to CEOs across industries who tell him they can find out more about their company sometimes from searching on Google than they can from their own internal systems. “Many CEOs figure out what they might expect by looking at what Wall Street is saying,” he says. “The street has better research often than the company itself.”
“They say, ‘We go to a meeting and we can’t make any decisions.’ This is despite the fact that since, maybe 1975, they have been making massive investments in IT.”
Sidhu says o9’s planning software facilitates “the conversation between R&D, sales, marketing, the supply chain, finance. Usually that conversation is not very effective because they’re all silos. That is the problem we’re solving.” The software, called mPower, creates a dashboard of up-to-date information about the company, resource supply, marketing initiatives, competitor statistics, and other data that can be crunched to answer specific questions.
Using his own time at i2 as an example, he says, “It was like the cobbler’s son not having shoes. We were signing these large contracts with 3M, Samsung, Pepsi, and at the same time I was looking at my company and saying, ‘I don’t have the right visibility.’”
With clients including Frito Lay, Motorola, Bacardi, Restoration Hardware, Dannon, and Columbia Sportswear, o9 is growing at a 200 percent rate, Sidhu says, and he expects his headcount to double over the next 12 months. Current leadership includes i2 veterans.
Still, the field is as not as wide open for Sidhu’s second startup as it was for his first. He again has competition from industry heavyweights SAP and Oracle, and there are a number of upstart competitors in the management planning software space, including West Coast venture companies Anaplan and Tidemark.
Sidhu says o9 is not yet profitable; he has been providing the company’s financing himself, about $15 million to date. Although Forbes once described Sidhu’s i2 experience as a “riches-to-rags” story, we all should be so unfortunate. He came away having cashed out $447 million in stock, plus his share of the 2010 sale, which figures to have been in the $150 million range.
Looking back, Sidhu says he made the classic mistake of many young entrepreneurs: “It was not planning well for the downturn. When you have a tremendous amount of success, that’s the only trajectory you know.”
Industry analysts say Sidhu showed at i2 that, despite being an extraordinary technologist, he wasn’t always the best businessman. The entrepreneur doesn’t argue with that today, though he says that, at age 57, he has a lot of hard miles behind him.
“Totally. There was a lot of naiveté,” he says. “I was very young. I really had no business or leadership experience. Before i2, I had not managed a single person. All my training was in technology. A lot of those things can be learned and, since then, I’ve been an adviser to Fortune 500 companies. Some CEOs call me for management advice, so I’ve come a long way since then.”
‘On to Something Big’
Sidhu says he had no particular career plans when he came to the United States in the late 1970s and began working toward a master’s degree in chemical engineering at Oklahoma State University. He earned that in 1982 and was working on a doctorate in systems engineering at Case Western Reserve University in Cleveland when he took a job at Texas Instruments’ artificial intelligence lab in Dallas. TI was working on ways to bring more efficiency to its manufacturing processes by using computerized simulations that juggled multiple variables. Sidhu compares the fundamentals to chess-playing software, where possible moves and multiple combinations of moves are considered and analyzed.
Coming to think he could commercialize supply chain software, Sidhu quit TI and teamed up with his friend Ken Sharma, who also was from India. (Sharma died of a brain tumor in 1999.) Sidhu says he became convinced they would succeed during a visit to Dallas by a team from one potential client, Caterpillar, the heavy equipment maker.
“Ken Sharma called me at 9:30 at night and said you need to go down to the office: ‘Their key planner has suspicions about the software.’” Sharma was having dinner with the Caterpillar team, which was leaving the next day, and they were wondering whether the results of an earlier demonstration were somehow faked or hard-wired into the demonstration. “The planner said, ‘I can’t believe a piece of software can do that,’” recalls Sidhu.
Sidhu, Sharma, the Caterpillar group, and some other i2 software experts assembled at i2’s offices for another demonstration. “We kept putting in new data and it kept changing with the moves,” Sidhu says. “The way they reacted, we knew we were on to something big.”
Companies such as Dell used i2’s software to match production with what was selling on the Web, automatically adjusting promotions to move products in the pipeline. Dell reportedly would adjust its schedule every two hours. Payless Shoe Source used the software to see how shoes were selling in each of its 4,200 stores, then adjusted prices and discounts to maximize its return.
No matter what was happening with i2 financially, Sidhu says, “there were almost zero customer defections. Our core value was focusing on customer value, so no customers defected.”
Miraglia, the steel executive, was both an early and a loyal customer. “I remember Sanjiv coming up to Canton, [Ohio,] to work on the software. He was driving a second-hand Honda with a box of Pampers in the back seat,” he recalls of his introduction to Sidhu in the early 1990s.
Miraglia says i2’s software improved his company’s “ability to produce what was needed in the time required,” and cut the need for about $100 million in working capital out of what was then a $1.3 billion company.
Among Sidhu’s most consistent traits was his tendency to stay calm no matter what problems arose as the bugs in the software were worked out, Miraglia says.
‘We are Wrecking the Planet’
That demeanor fits well with someone who describes his interests as “meditation, yoga, contemplative things.” On his personal Web page, Sidhu is casually dressed in red jeans and a deep-blue collarless shirt. He’s barefoot and sitting in a stylish yellow chair. “Shoes are a very Western thing,” he says, when asked about the photo. “We grew up with no shoes. We went out to play with no shoes. Going to Western school, I had to wear shoes. It was real punishment.”
Sidhu says he prefers to live simply, eschewing a lot of material things. Asked if he collects anything, he answers, smiling, “I’m anti-collecting. I hate having stuff.” His tastes haven’t changed over the years. In 2000, when his net worth was topping out, he told Businessweek, “I don’t have very high-profile toys. My car runs. My home is livable. My jet is a time share.”
“i2 created many millionaires. I looked at many of these people, including myself, and I asked, ‘Are we actually happier?’ The answer is, ‘Not necessarily.’”
“The way I look at it, i2 created many millionaires. I looked at many of these people, including myself, and I asked, ‘Are we actually happier?’” he says. “The answer is, ‘Not necessarily.’ I felt some people were actually unhappier. The wife of a person who made more than a million dollars told me, ‘It’s very strange. My husband is actually an unhappier person now.’ She said, ‘Our vacations are more elaborate but less fun. Anytime he doesn’t get the service he thinks he deserves as a rich person, he’s outrageously upset.’”
To help challenge that type of thinking, Sidhu has been “pre-beta-testing” a sort of self-help program, free on the Web, called Version2. “It focuses on individual change, very similar to the principals we use at o9,” he says. “I want to see if we can create better humans, ones that are more empathetic and more satisfied from within, that don’t need more and more stuff.” Success often means “bigger cars, bigger boats, bigger houses, more consumption, and that’s not the direction the planet needs to take,” he says.
His fear that “we are wrecking the planet” informs not only his personal thinking, but his ideas about business efficiency as well. “Corporations are the biggest users of the world’s resources, thus our goal of resource optimization, to make better use of raw materials, energy and people,” Sidhu says. “Our benchmark at o9 is, in 10 years, to have as big an impact on the world’s resources as the big environmental advocacy organizations.”
On his nightstand at the moment are books on personal development, neuroscience, and the human brain. “It has to do with my interest in change, how you can reprogram individuals and organizations,” he says.
Sidhu’s life approach has him looking trim and healthy; the only obvious change from earlier portraits is the gray that has appeared in his hair and beard. Describing himself as “98 percent vegan” he mostly eats at home, but names Kozy on McKinney Avenue and True Food Kitchen, a vegan and vegetarian chain, as two favorites. “If I go out in Dallas I let friends pick,” he says. “Even though I’m vegan, I’ll find something.”
Personal questions such as this have Sidhu all but squirming. He’s impatient with matters that strike him as trivial. Still, he soldiers on when asked about a few other out-of-the-office matters.
When he’s in San Diego, where he spends part of the year, Sidhu says he’s partial to being in the water and he likes surfing, despite its difficulty. At night he likes salsa dancing, but doesn’t do as much as he would like, he says: “Salsa dancing gets going at 11 o’clock, and that doesn’t fit my work schedule.”
So, why does a man with a nine-figure net worth keep working with such dedication? “It’s a question that’s asked of me often,” Sidhu says. “I answer it by saying, ‘Think about an artist or musician. Do they stop creating after they’ve made enough money?’ I’m no Picasso, but this is our art form, the software we create and consulting advice we provide. You look at what you’ve done before and ask, ‘How can it be improved on?’ How can you take it to the next level?’ That’s a lot of fun.”
