Add Joe Liemandt to the list of successful college dropouts.  The Stanford University economics major and part-time computer lab consultant dropped out his senior year in 1989 to form "front-office" software developer Trilogy Software, Inc.  (1)  When informed by his son that he was dropping out to start the firm, his father's curt reply: "You're a moron". (2)  Today the private firm is valued at over $1 billion and recognized by many as the most successful still-private software start-up in the 1990s.  Joe Liemandt's 55 per cent ownership of the company works out to over $500 million.  The question is: Does Trilogy represent the enterprise of the future?

The successful 21st Century companies recognize the importance of talented people and the tremendous opportunities available to them.  These talented individuals' loyalties are not taken lightly.  Progressive firms acknowledge that loyalty is a two-way street.  Robert Reich, former Secretary of Labor under President Clinton, identifies six "social glues" for the high performance companies of the future:

1. Money Makes It Mutual.  Rather than competing for money, company founders are enlisting employees through the use of stock options.  If you want talent to work for your organization with the enthusiasm that comes with ownership, then you have to trade equity for it.
2. Mission Makes a Difference.  Talented people want to be part of something that they believe in, that involves spiritual goals that energize an organization.  A powerful mission is both a magnet and a motivator.
3. Learning Makes You Grow.  People recognize the importance of intellectual capital in the new economy, and want to join an organization where they will be given every chance to learn continuously.
4. Fun Makes It Fresh.   Hard work requires that the work be fun, that it support friendship and camaraderie.  Hard work must be "harnessed" to shared enjoyment.
5. Pride Makes It Special.  We all like to be assoicated with an enterprise that feeds our sense of pride.  Membershiip in these companies confers status - and status is a form of captial.
6. Balance Makes It Sustainable.  Balance is not just a set of programs to support work and family - rather it is a way of doing business.  The choice is moved to the employee, not the firm. 

From his early youth, Joe Liemandt was steeped in buisiness lore.  Working for General Electric, Joe's father Gregory Liemandt's superior was Jack Welch.  As a child, Joe played hockey with Mark Welch, Jack's son, spent weekends at the Welches' and often went on ski trips to Lake Placid with the Welches.  Joe Liemandt remains a close friend with the senior Welch, often approaching him for business advice.(4) 

Joe Liemandt knew he was going to start a computer software company when he got to college.  "I started doing tons of research.  I'd sit in the library going through lists of the top 50 software companies".  In addition, he did part-time consulting for computer companies in the surrounding Palo Alto area. The huge teams of programmers - often 50 to 100 people - created such coordination problems that the projects often fell apart.  This was a lesson Liemandt would remember in the future. (5)

He quickly recognized that shipments of computer equipment would arrive late and with parts missing or incompatible with his computers.  He became aware that while manufacturer's "back-room" operations, including general and administrative expenses, R&D expenses, and manufacturing costs had been automated through computers, sales and marketing - representing more than 40% of their noncapital spending - was not yet computerized. (6)  "Sales configuration software" had yet to be born.

"What people usually mean when they say sales force automation is putting a bunch of customer information on a laptop for a sales rep.  We didn't see a big return there.  We didn't feel that trying to improve the point productivity of salespeople, most of whom did not use computers, was that valuable.  The sales rep doesn't need time to manage his contact better.  But when he needs a price quote or information from the home office, he needs them instantly". (7) 

The problem faced by firms approaching this arena was the complexity involved with a broad product line.  Rule-based programming, one promising approach, required too many if/than statements, resulting in unwieldy programs.  Constant-based equation models, utilized heavily in optimizing airline passenger yields and the military, wasn't capable of efficiently handling large volumes of data required for an effective sales configuration model. (8) 

Together with Stanford students John Lynch, Christina Jones, Chris Porch, and Tom Carter, Liemandt applied algebraic algorithms similar to ones used by mathematical economists to construct general equilibrium models of the economy.  Forced to move to Austin, Texas to be near his ailing father, Liemandt was able to attract David Franke to join the fledgling Trilogy.  Providing necessary credibility with large corporate clients, Franke was able to land Hewlett-Packard in 1992, who abandoned their own sales configuration software by choosing Trilogy. (9)  At this point, Trilogy numbered eight employees.  The HP sale was quickly followed with contracts with Boeing, Silicon Graphics, Alcatel, AT&T, and others. 

While the initial product was a crude configurator, further refinements led to Selling Chain, a product that went beyond mere sales configuration.  Trilogy's Selling Chain "consists of all the links between a corporation and its customers. These links include the sales team, service department, marketing, advertising, manufacturing, tech support, etc.  Every member of the chain has instant access to vital information. Armed with accurate, up-to-date data, salespeople can dramatically reduce costs and shorten the sales cycle".  (10)   HP was able to cut orders rejected by factories to just 2 per cent from up to 40 per cent previously.  "If you were to pull the plug on the Trilogy system, we simply could not sell any more" says Nick Nebehay, worldwide sales administration manager. (11) 

"It takes 12 hours to build a car," says Liemandt. "When the dealer tells you it
takes six to eight weeks for delivery, that's all front office administration. For
the whole '80s everybody focused on the supply chain, total quality manufacturing, concurrent engineering. They spent all their money on the back office. All the major manufacturers have taken their manufacturing times from six weeks to six days but they haven't done that for the front office. All the return for the next 10 years is going to be in the front office, the selling chain." (12)

Using Trilogy's Selling Chain software, clients load all the options and product specifications they offer into the program.  Modules for prices, quotes, financing, catalogs, component compatibility, and all the possible variations are sorted out by computer.  According to Trilogy, two per cent of manufacturers' gross revenues are spent to correct human errors and configuration errors.  In 1994, Robert DeBakker, director of order fulfillment for Sequent Computer Systems purchased Trilogy software and services for $700,000.  He claims that the investment saved Sequent over $3 million if the first year. (13) 

Reengineering guru Dr. Michael Hammer believes the next big wave of reinvention among American businesses will be for the customer.  "Companies are selling more complicated products than ever before. Customers are more demanding. The good news is that after a decade of intensive work in manufacturing and logistics, we've made tremendous progress in order fulfillment. The bad news is that we can't get the order right – the front end is no good."  Sales automation for the sake of automation is not the answer. "Automating a mess creates a mess," he declares.   "Companies have to rethink the process behind getting the order and placing it." (14)

Dr. Hammer identifies three critical benefits to corporations who use sales configuration software: (1) shorter selling cycles, (2) increased customer satisfaction and (3) higher market share. High-tech firms are on the cutting edge of the selling chain reengineering movement. "Computer companies like IBM and Hewlett-Packard are taking the lead," he contends, "because their products are complex and yet ironically have been commoditized. They have to differentiate themselves in order to remain competitive."  The consumer packaged-goods industry is also taking notice, with companies like Procter & Gamble and Colgate Palmolive attempting to differentiate themselves by improving their front offices. (15)

In all cases and industries, the return on investment for customers installing Selling Chain has been impressive.  Recalls Liemandt, "We had a customer who saved $5 million on catalogs alone.  Seventy percent of the catalogs they sent out to the field would never get read by anybody.  Once they automated the system so a sales rep could print one out locally when he needed it, they saved $5 million."

"One customer, a large distributor, was spending $30 to $40 million a year on their pricing system before we came along. They printed price books and sentthem out quarterly, providing their sales reps with weekly updates in the formof paper sheets that had to be inserted into their price books. Forty percent of the time the sales rep was still quoting the wrong price because they missed sheet number 6a." (16)

Boeing provides another excellent example of the value of sales configuration software.  A Boeing 747 involves over 6 million parts and a customer can choose from hundreds of options.  Every option the customer selects affects the availability of other options and the ultimate price of the plane.  Prior to using computers, redesign efforts could take weeks to prepare.  Utilizing Trilogy software, a Boeing salesperson can sit down with a customer and configure the 747 on a laptop, complete with price quote in one trip. (17) 

Computer sales 

IBM rolled out Trilogy's Selling Chain to 35,000 members of its worldwide sales force. The program integrates essential information from sales, marketing and manufacturing that allows salespeople to evaluate customer needs, accurately configure systems, prepare quotes and create a graphic representation of a product solution. 

Automotive sales 

Chrysler uses Selling Chain to allow prospects in shopping malls to create their dream car by selecting features and options at a touch-screen kiosk.  Customers can get instant pricing and delivery information, and the kiosk will offer the shopper the option to build a new car or select a near-match available at a nearby dealership. 

 Retail sales 

Custom Foot shoe stores use Selling Chain to help customers design and order custom-made Italian shoes to their exact specifications. Custom Foot offers more than 10 million shoe options. Selling Chain links stores and corporate offices with factories in Italy. The custom shoes are delivered within two weeks. Jeff Silverman, CEO of Custom Foot, says, "We carry no inventory and there are no middlemen. This is true mass customization at a lower cost." (18)

Although Joe Liemandt's father had made over $30 million by working for the likes of General Electric and UCCEL, a maker of software for mainframes, no family money was used in the start-up.  As his mother states, "Outside of slipping him $100 bills in the airport, there was no [family] seed money". (19)  Unable to attract venture capital, Liemandt charged over $500,000 on 25 credit cards in the early days.  "We bootstrapped ourselves using sweat equity", explained Liemandt. (20)

As Liemandt states, "There are three things venture capitalists look for: an experienced management team – and a bunch of 19- or 20-year-old kids doesn't cut it; a really experienced technical team who's building a product for the second time, which we weren't; or a new hit product. But the last thing you'd ask kids to do is write a mission-critical application for the Fortune 500, which is exactly what we were doing." (21) 

They were eventually successful at raising $4 million in their second try with venture financing.   "I wanted to sell as little as possible," Liemandt explains, "because I was looking for some help in building the company.  I didn't really need the money.  One thing about being a successful entrepreneur is that you think you know everything. That's also the downside."  He sold under 20 percent to the venture capitalists, who now sit on the board and provide valuable guidance. (22)

As far as Jim Hook, director of dealer development at Haworth, Inc. is concerned, designing office space for clients can be as complex as putting together Boeing 747s.  Before the first piece of furniture even gets through a customer's door, Haworth's sales force uses computer-visualization software provided by Trilogy to provide a peek at what the customer's offices will look like and the project's cost. 

Trilogy, Inc.'s configuration application, which tracks the pricing of thousands of components in Haworth's customizable, build-to-order product line, reduces the number of sales visits required to make a deal from five to two by putting more information into the hands of the sales force.  It might take a designer hours to route an electrical wiring layout to a salesperson. But a salesperson can use Trilogy to configure the layout in minutes, eliminating a lot of the back-and-forth between Haworth and the customer.  On a typical $15,000 project, the system also provides pricing estimates within $100. (23) 

Haworth's executives hope that the Trilogy application, called the Sales Builder Engine® (one of several modules in a suite called Selling Chain®), will shorten the company's sales cycle, make its huge parts catalog more easily understood, and increase order accuracy. According to Smith, Haworth's senior sales-automation expert, that would be a significant competitive advantage for the 9,000-employee company, which is the world's second-largest seller of office cubicles and had $1.2 billion in sales in 1995.  Smith says Haworth spent more than $1 million on the Trilogy software.

Previously, the salesperson and CAD (Computer-Aided Design) operator typically had to go through a CAD mock-up process several times -- with the sales representative returning each time to the customer to show the mock-up -- to complete an order. Only after the last CAD mock-up is approved is the CAD workstation software used to create a bill of materials that goes to Haworth's factory for manufacturing. With the Trilogy software, Haworth is re-engineering its sales by shifting detailed parts-assembly information from the corporate level down to the customer level. (Haworth on Trilogy's web site)

Trilogy has been quick to embrace the Internet, viewing it as a natural extension of their vision of front office automation.  In 1996, Selling Chain was rewritten in Java to enable it to support e-commerce on the web.  Not content to sit back and enjoy the success, Trilogy continues to innovate, having recently introduced Buying Chain, a low-cost procurement application designed for browser access.  Companies using Buying Chain create catalogs of hyperlinks to web sites of online merchants that have "Buying-Chain-enabled" their sites.  One recent convert is Office Depot, allowing its online customers to update their internal product catalogs with Office Depot products. (24)

Does Trilogy represent the company of the future?  If so, its exhibits a culture that is refreshing and unique compared to many older companies.  With an average age of 27, its employees represent the new importance placed on talent and learning.  From POP ("Party on the Patio") to taking the company jet ski out for a spin, the culture looks to cultivate stars.  As the company is proud to state, what matters at Trilogy are Results, Results, Results. (25)

Trilogy's vision makes it clear that the company sets extreme goals, but it does amazing things to support its employees so they can realize these goals. Trilogy comprehends that the key to fast growth is to recruit the best people, to get them up to speed as quickly as possible, and to turn them loose so that they can make an immediate impact.  "At a software company, people are everything," Liemandt says.  "You can't build the next great software company - which is what we're trying to do here - unless you're totally committed to that.  Of course, the leaders at every company say, 'People are everything.' But they don't act on it." (26)

What are your top three challenges?

(1) Hiring the right people, (2) making customers successful, (3) not losing the culture – keeping Trilogy a place where individuals can really shine. I want to make it a place where individuals are constantly challenged, are in over their heads and find ways to get out of it.

How do you recruit the right people?

We look for people who are like us – who have a fiery passion, who really want to make a difference, who are top notch in their field. We put these people through months of boot camp – we call it Trilogy University – to educate them about the technology and the business. And then we let them loose on the world.

How can companies use technology to improve their sales?

Technology will only have the right impact if it's applied the right way. The focus has got to come from the businesspeople. If the VP of sales wants to drive change in the organization, it's a great tool. The focus we always have is return on investment. If it becomes technology for technology's sake it doesn't bring the return you need.

Who makes the best salesperson?

Our best sales reps make our customers successful by developing and managing a relationship with them. Customers learn to trust that if it's in Trilogy's capability, we will make it work. Developing trust and faith is the number-one thing and this can happen only through proving ourselves over time.

What do you bring to Trilogy as a salesman?

I bring enthusiasm and evangelism. When you talk to me, you get the feeling that we can deliver on our promises. I'm also very content-rich. I've been through so many of these customer experiences that I can customize my presentation to each audience.

What was your most memorable sale?

The best sales were the ones back in '92 when we were still selling the dream. We had something but not enough. I couldn't point to references. All I could say was, "We don't have much to show you but we're so close and you're just going to believe that we can do it. If you have to bet on a system, you will bet on Team Trilogy." It was all personal selling and there was no data to back it up. To an extent I miss it. They'd say, "Who are you? Are you 22 yet? How much money do you want?" In the end, I said, "You've just got to believe me on this." (27) To recruit the talent it so desperately needs, Trilogy utilizes tactics that others refer to as "crazy".  The firm aggressively pursues people with the least experience in the job market.  It focuses on college campuses and career fairs for every type from computer science to liberal arts majors.  The common thread involves young, talented overachievers with entrepreneurial ambition to provide what Jeff Daniel, Trilogy's director of college recruiting calls "a good technical and cultural fit". (28)

In 1998, the company reviewed 15,000 resumes, conducted 4000 on-campus interviews, flew 850 candidates to Austin for on-site interviews, and ended up hiring a total of 262 college graduates - 33 from Carnegie Mellon, 26 from Penn State, 23 from Stanford, 20 from Harvard, 16 from Princeton, 11 from Cornell, and 10 from MIT. (29)  Some students have nicknamed Trilogy "The Firm" because its outsized recruiting tactics resemble those of the notorious law firm Bendini, Lambert & Locke in John Grisham's novel. (30)  This time-consuming process is expensive, at $13,000 per hire, but the firm is aiming for the "whiz kid" who will develop the next hit software package. (31)

One of Trilogy's most active recruiters is Liemandt himself.  One of the youngest members of the Forbes 400 list of the richest Americans, he remains a surprisingly down-to-earth guy - "the most unassuming $600 million man you'll ever meet" claims Daniels.   A bachelor, he wears jeans and tennis shoes to work, lives in an apartment without a television, drives a Saturn, dines at Wendy's, and gets his hair trimmed at Supercuts.  However, he has accomplished what many of the hotshots drawn to Trilogy only dream of doing: He has taken a great idea and turned it into a successful company. (32)

Trilogy utilizes a sponsor/star approach to developing talent within the organization.  Job evaluations rank Trilogians from one to three, with one being a "star".  In the hiring process, Trilogy doesn't just evaluate its recruits, it also evaluates the evaluators.  Employees whose recruits are on their way to becoming stars become "sponsors".  There are about 60 sponsors in the company today, and rarely does a candidate get hired without one.  In   sponsoring a candidate, sponsors are accepting responsibility for his or her performance.  "If you hire someone and you're wrong, it's your job to be a mentor and fix the situation". (33)

Chris Hyams

A.B. in History and Theory of Architecture, Princeton University, 1989, Masters in Computer Science (MCS), Rice University, 1996

I am a developer at Trilogy, working on our core application architecture, the Selling Chain Backbone, primarily focusing on Replication. I initially came to Trilogy because I wanted to work with smart people, solve challenging problems, and generally feel like I had a meaningful and tangible impact on both end users and the company as a whole.  I have stayed at Trilogy for the past two and a half years because I have been able to do all of this and more on a regular basis.

A day in my life is both typical of a developer at Trilogy, and at the same time, quite atypical.  It is typical in that I spend my time wearing a number of hats: writing code, working with Trilogy consultants helping them customize and deploy our apps, advising other developers integrating to the architectural framework that I work on, interviewing recruits, talking to partners and customers, etc.  At the same time, my day is atypical, in that I do this all from my home in Berkeley, CA.  I telecommute full-time from my home office, making the trip out to Austin once a month or so.

The point of this is not necessarily that Trilogy lets people live wherever they want  as a rule, they dont.  However, Trilogy is one of the rare companies that honestly cares about doing whatever it takes (within reason) to keep people happy.  I wanted my 2 young children to be able to live closer to their grandparents.  Trilogy decided that as long as I got my work done, that was cool.  Some people like to sleep all day and work all night.  Others prefer to work a more normal 9-5.  Some come to the office only for weekly meetings.  Still others sleep on a futon in their office.  One thing that I love about Trilogy is that in the end, no one cares how you do your work.  What truly matters is how well you do it.  Good work is highly regarded, and highly rewarded.  This bottom-line kind of attitude is at the same time honest, refreshing, and very effective.

The following example is a sampling of one day in my life at Trilogy  a summary of events from one very real day last week. 

• Worked with developers of our Commission product to resolve issues concerning replicating Commission models in a multi-user maintenance environment. 
• Made final decisions on what features would go into the next minor release (3.1) of the Backbone and Replicator. 
• After a week or so of iterative debugging, finally found and fixed a rare and obscure shared memory allocation bug in the previous (2.1) release of our software. 
• Work with the QA/test team to help automate the running of regression tests for my products after a new build. 
• Phone interviewed an industry development candidate on the East Coast. 
• Had a conference call with a business unit head and a consultant about the details of the shared memory bug, so they could clearly explain to their customer what the problem was, and how we fixed it. 
• Answered a couple dozen assorted email messages on various Trilogy mailing lists, mostly concerning technical details of the Backbone and Replicator architecture. 
• Talked on the phone with a half dozen consultants in various cities concerning similar issues. 
• Finished up coding a major feature (Schema Replication) of the 3.1 Replicator release. 
• Code-read changes to our core database abstraction layer that another developer had implemented. 
• Worked with another developer, helping to resolve issues of porting an ActiveX control written in VB to C++. 
• Talked with a technical contact at a database company about resolving some of the technical roadblocks to integrating our Backbone with their database. 

To improve the evaluation process, Trilogy depends on its best developers and programmers, its best consultants and salespeople.  Graham Hesselroth, one of Trilogy's top developers, conducted over 350 interviews in 1998.  He's considered one of Trilogy's toughest interviewers in addition to being one of its best judges of talent.  He sponsors only a handful of recruits, but those he chooses are almost assured of becoming stars.  His approach is direct: "You better blow me away".  He reasons that to remain competitive, the company must hire developers and consultants who are better than the ones now on board. (34) 

The company pays from $45,000 for recent college graduates up to $90,000 for MBAs.  However, it is looking for people that want more than just money from a job.  Trilogy views itself as a "movement", and introduces new recruits to mainstream projects immediately upon their arrival.  "You don't have to sit around here earning tenure before you can see a customer," says Daniel.  "one of our TUers, a guy from Harvard, is already working on accounts in France.  I go out and tell my recruits, 'A kid your age was here for a month and a half, and now he's in Paris.  That's Trilogy'". (35)
 
  As for work hours, Trilogy believes in flexibility. It makes the most sense that people work when they are most productive, and only you know when that is.  Some work from 5 A.M. to 5 P.M., while others don't believe in the cruel and unusual abuse of alarm clocks and never show their faces before lunch time.  There is no time clock to punch when you take off to Barton Springs at noon because it's just too gorgeous to be indoors, Lilith Fair tickets are on sale, or you want to take one of the company ski boats out and have lunch at Carlos and Charlie's on the lake. (Excerpt from Trilogy's statement on culture)

Trilogy welcomes its new recruits to Trilogy University (TU), a highly intense, extremely unorthodox orientation program begun in 1995.  For three months, Liemandt and seven other Trilogy veterans dedicate almost all their time to training new recruits in Trilogy's corporate boot camp. On the small sign posted in the training facility, someone has written TU's business hours: 8 AM to midnight, Monday through Saturday, and noon to 8 PM on Sunday.  This is not necessarily an exaggeration. (36) 

Located in an office building in Northwest Austin, TU sites down the hill from company headquarters (known as "uptown").  But TU is no ordinary training facility.  Similar to a computer lab at college, software manuals and compact disks are scattered among IBM ThinkPads.  Each section is decorated with bizarre mementos.  "The sections are like social units," says Danielle Rios, a section leader.  "You bond and learn about Trilogy culture - how we operate, how we talk, how we party, how we work". (37) 

TUers wear what they want, and they set their own hours.  They eat catered lunches and dinners in the TU conference room, and they snack out in the TU kitchen.  Many TUers claim that going through it is like cramming a year of college into the three months they spend at TU.  "Here it comes so fast, it's like a fire hose," comments Jamie Sidey, from the University of Pennsylvania.  "I had this epiphany recently.  A bunch of us were sitting around, and I realized, 'I'm in a room with 14 of the smartest people I've ever met, and we're having this high-level discussion, and none of us thinks it's anything out of the ordinary.  This is great!'" (38)
 

A primary concept that Joe Liemandt is attempting to convey to his new hires is that of risk.  In 1994 Liemandt bet a Trilogy programmer his blue Lexus that the programmer couldn't finish a project in time for a client proposal. The programmer upped the ante: If Liemandt lost, he would have to fork over his Lexus and drive an Aspire, Ford's smallest subcompact car. Lexus-less, Liemandt crammed into the Aspire for over a year. (42) 

The purpose behind TU was to re-create the spirit of Trilogy's startup years - indeed, to turn Trilogy into a perpetual startup.  Liemandt supports failure in his new recruits, but only up to a point.  "They are totally clueless at times," Liemandt explains. "They come up with an idea for a product, and they don't let anything get in their way, even though their basic business plan has this huge hole in it. They expect magic to occur. So I tell them, 'You've got to explain the magic to me.' " (43)
 
 

TUers are living out their dream.   Liemandt explains, "They just came out of school, and they're like, 'I studied a lot. Now I want to work a lot. So don't bore me, and don't spoon-feed me. Give me really hard stuff and lots of responsibility, and I'll go deliver.' And by sheer force of will, they do deliver. They come up the learning curve very quickly." (45)

The products that have emerged from Trilogy University are impressive. The class of 1995 created Trilogy's Selling Chain software that streamlines the selling process. The class of 1996 moved that product to the Internet.  The class of 1997 developed two major products and five minor ones. (46)  TUers are living out their dream, Liemandt explains. "They just came out of school, and they're like, 'I studied a lot. Now I want to work a lot. So don't bore me, and don't spoon-feed me. Give me really hard stuff and lots of responsibility, and I'll go deliver.' And by sheer force of will, they do deliver. They come up the learning curve very quickly." (47)

Because of its phenominal success, Trilogy itself has become a target for recruiters.  Liemandt is not worried about headhunters.   "My job is to make this company so compelling that you want to stay. I do that by continuing to hire the best people. The number-one reason that our employees give for not leaving is 'I wouldn't be able to work with these people anymore.' It always comes back to the quality of the people." (48)

Liemandt realizes that the configuration software business is too good to be ignored by competitors.  A few smaller competitors have sprung up, but the real threat now comes from larger outfits. European software powers--SAP of Germany ($1.9 billion sales) and Baan of the Netherlands ($216 million)--have established themselves in automating back-office operations, as has Oracle Corp. Now all three companies have started to make forays into sales automation. (49)  Baan's purchase of Antalys Inc., a provider of sales configuration software, will provide it an ability to package the software with Baan's manufacturing and distribution software in a "suite" of products. (50) 

In conversations with Jack Welch, Chairman of General Electric, Welch consels Liemandt to concentrate onf growth.   "After talking to Jack, I feel like I'm going half speed," Liemandt reports. "He tells me, 'Don't be such a wuss, Joe.'" (51) 

As a result, Trilogy has been aggressive in developing new lines.  Trilogy cofounder Christina Jones had a hot concept: use Trilogy's sophisticated software to configure and sell computer systems to individuals, resellers and small companies over the Internet. Joe Liemandt, thought Trilogy should continue to focus on selling software to big corporate accounts. But he made her an offer. If Jones would trade her Trilogy stock back to the company, he'd give her a substantial stake in a new company formed to carry out her Internet idea. "[The Trilogy stock] was all she had," Liemandt says. "But I wanted to make sure she really believed in her idea. I told her it had to be all or nothing." 

Jones now owns an estimated 20 per cent of newly formed pcOrder.com, Inc., a company that maintains and constantly updates a database with specifications and prices of more than 150,000 products ranging from memory boards and connecting cables to video cards and spreadsheet software made by about 800 hardware and software manufacturers. 

Unlike Netscape and most other Internet companies, pcOrder doesn't rely on advertising for the bulk of its revenues. Jones has signed up about 100 computer resellers, which pay $1,000 per salesperson per year to use pcOrder's service. These revenues are now running at an annual rate of over $1 million. There are also a half-dozen computer equipment distributors (including two of the largest, MicroAge and Intelligent Electronics) that subscribe to the service and have kicked in about $10 million so far. In addition, pcOrder sells some advertising space on its Website, and it gets a commission, between 1% and 5%, on every sale completed over the service. Likely revenues this year: up to $12 million. 

The resellers use pcOrder to order systems on-line rather than by phone or mail. Computer shoppers can use pcOrder's Website to custom-design and compare computers. By June Jones expects to have in place encryption technology that will allow individual shoppers to design and buy computers by credit card through pcOrder. 

The service is useful to the manufacturers, too, because it gives them immediate feedback on which of their products are in demand. If IBM assembles 500,000 laptop computers with Pentium Pro processors but without CD-ROM drives, and then CD-ROM drives become the rage among consumers, IBM has an inventory problem. By watching the orders flowing across pcOrder, IBM can spot a surge of CD-ROM drive orders early and ramp up its production lines and deliveries accordingly. 

Last year Jones hired as her top programmer Carl Samos, who had replaced Marc Andreessen as lead developer of the National Center for Supercomputing Applications' Mosaic, the Internet browser project that spawned Netscape. Samos' name will no doubt help.  "It took some blind faith on her part," says Joe Liemandt. "But hey, she'll be liquid first."  (52)

On February 26, 1999 pcOrder.com (PCOR) sold 2,200,000 shares at $21 per share in an IPO to an underwriting group led by Goldman Sachs & Co., Credit Suisse First Boston Corporation and S.G. Cowen Securities Corporation.  Shares rose 55% on the second day of trading, with share prices stabilizing in a trading range of $21 - $92.  The offering benefited from the extreme interest in anything with .com in its name. 

Jones appreciates the importance of motivating her people. She puts on Friday afternoon keg parties at pcOrder and keeps a well-stocked kitchen there. The company keeps a 21-foot Sea Ray speedboat for waterskiing on nearby Lake Austin, and two Kawasaki jet skis. She promises the whole company - 190 employees - a Caribbean cruise if all groups meet year-end goals. Recently she gave $5,000 bonuses to employees who successfully recruited a programmer, and entered their names in a raffle for a Porsche Boxster. And a week before the annual pcOrder prom, she hired dance instructors to give lessons in the headquarters lobby.  The company even had a tuxedo rental shop to come to the office and give individual fittings. (53) 

Jones' original business plan was to build her own Web site and act as a sales agent for computermakers, taking a commission for each sale. Distributors were horrified; they saw pcOrder as a competitor. Ross Cooley, manager of Compaq's North American operations,  persuaded Jones to change the business plan.  Instead of setting up her own electronic storefront, pcOrder would provide storefronts for individual manufacturers and dealers. Jones persuaded Cooley to come on board as chairman and chief executive of pcOrder in exchange for a 7% stake in the fledgling company. After 18 years at IBM and 14 years at Compaq, retirement was looming for Cooley. He welcomed the new challenge. 

Building on the concept of Trilogy's Selling Chain, pcOrder may be reshaping the way computers are sold.  Dell Computer dominates the direct sales method, but pcOrder is changing things, not through eliminating the middlemen, but my making them more efficient.  The technology lets corporate customers go to the Web and choose the features they want - from the speed of a microchip to the hard-disk space - with just a few clicks of the mouse. PC dealers, using Jones' database, can instantly scan 600,000 different parts from 1,000 manufacturers and find out what's in stock and at what price. They then electronically pass the order on to the distributor, which forwards it to the PC maker. (54)

PcOrder's software is a practical outgrowth of artificial intelligence (AI) that allows its software to "recognize" which of the thousands of computer parts will work together best.  Compaq, HP and IBM have licensed pcOrder software. So have the three largest U.S. PC distributors, Ingram Micro, Tech Data Corp. and Pinacor, Inc. Despite its momentum, pcOrder is hardly a guaranteed winner. While the major PC-makers and distributors are on board, only about 5,500 salespeople actually use the software; approximately 45,000 remain to be convinced that ordering PCs over the Web beats doing business over the phones and faxes.

The hiring process At Trilogy has been so successful that the company chose to spin off its acclaimed college recruiting program into a separate company called CollegeHire.com. The new company focuses on helping companies recruit graduates with technical backgrounds. Its chief executive is Jeff Daniel, who led Trilogy's recruiting efforts for the past three years. Trilogy's ability to hire top students from top universities, beating out companies like Microsoft Corp., has attracted attention from businesses and students. 

"The college recruiting process is a mess, with a lot of waste and a lot of inefficiency," explains Daniel. "Companies spend a lot of money and end up frustrated when they fail to find the right students. We're going to change the way it works by making it easier for companies and students to connect."  CollegeHire takes over the most painful parts of college recruiting for companies: sifting through hundreds of resumes, doing preliminary interviews and picking out the qualified candidates. If the CollegeHire client hires one of the students, it will pay CollegeHire 22 percent to 33 percent of the first year base salary. The more students a company wants to hire, the lower its fee. (55) The service makes particular sense to smaller companies and those firms that don't have formal campus recruiting programs get access to IT students. "We don't have the resources to do college recruiting," said Bernadine Wu, a vice president at Jeffries and Co., a brokerage in New York. The firm has 1,000 employees, 100 IT staffers and no in- house recruiters.  For Jeffries, the costly process of recruiting on college campuses is out of the question, Wu said. "This service is appealing because [CollegeHire.com] would do the legwork for us," she said. (56)

CollegeHire.com has already been implemented at pilot schools in California and Georgia: the University of California, Berkeley; California Polytechnic Institute; Harvey Mudd College; Georgia Tech; the University of Georgia; and Emory University. (57)  With a growing list of high technology firms, one recent corporate client to join the service is Amazon.com.

In a hot stock market, numerous investment bankers have approached Liemandt to discuss taking Trilogy public.  Many argue that an initial public offering (IPO) would value Trilogy around $1 billion.  Liemandt does not appear to be eager to jump on the IPO craze.  "The market's way overpriced, absolutely," he says.  But Liemandt argues, "Making 8 zillion dollars is not the win.  If that was it, we'd go public tomorrow and cash out.  But if we don't change the way people buy and sell things, then we blew it." ( 58)

The phenominal successes of Microsoft and Intel prove that in the computer industry the spoils go to the company that grabs market share early on and keeps it, leaving competitors in the position of always trying to catch up. So it's warp speed ahead for Trilogy to keep its early high market share as the market grows. "It's a land grab," Liemandt says.  "Whoever gets the market share and partners first, wins. We've got two years until it [the land grab] is over." (59)

But questions remain.  Should Liemandt consider merger with a larger player; or purchase smaller players in complemetary product lines?  One difficulty Trilogy faces is the incompatibility of its products with other, larger firms' product lines.  With "product suites" so popular, SAP or Baan might be better positioned to offer a complete package of compatible software for both "back-end" and "front-end" situations.  Can Trilogy continue to develop new product lines fast enough to stay ahead of the market?  Will the spin-offs prove profitable? 

If you could sit down with Joe Liemandt for one hour, what would YOU suggest?

What is it Like to Work at Trilogy Software?

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1. Starr, Karen.  "Dream On! Meet Joe Liemandt,http://www.trilogy.com/news-events/ar-detail.asp?id=77, SellingPower, October 1, 1997.
2. Reich, Robert.  "The Company of the Future",http://www.fastcompany.com/online/19/comfuture.html , Fast Company, November, 1998.
3. Ibid.
4. McHugh, Josh.  "Holy Cow: No One's Done This", http://www.forbes.com/forbes/060396/mchugh.htm, Forbes, June 3, 1996.
5. Ibid.
6. Starr, op. cit.
7. Ibid.
8. McHugh, op. cit.
9. Ibid.
10. Starr, op. cit.
11. Kim, James.  "Software Pioneers Ease Pricing Process", http://www.trilogy.com/news-events/ar-detail.asp?id=74, USA Today, February 24, 1998.
12. Starr, op. cit.
13. McHugh, op. cit.
14. Starr, op. cit.
15. Ibid.
16. Ibid.
17. Ibid.
18. Ibid.
19. McHugh, op. cit.
20. Starr, op. cit.
21. Ibid.
22. Ibid.
23. Girard, Kim.  "Want to see that desk in 3-D? Virtual office software may boost furniture sales", Computerworld, April 6, 1998, p.55.
24. Kerstetter, Jim.  "Trilogy Waves 'Buy-Buy'", PC Week, September 14, 1998.
25. "Trilogy Homepage - Culture", http://www.trilogy.com/careers/college/culture.html, April 15, 1999.
26. Salter, Chuck.  "Insanity Inc.", http://www.fastcompany.com/online/21/insanity.html,Fast Company,  January 2, 1999.
27. Starr, op. cit.
28. Ibid.
29. Ramstad, Evan.  "How Trilogy Software Trains Its Recruits to be Risk Takers", Wall Street Journal, September 21, 1998, p. A1, A10.
30. Verespej, Michael A. "Do Anything You Want", Industry Week, November 16, 1998, p. 14.
31. Salter, op. cit..
32. Ibid.
33. Ibid.
34. Ibid.
35. Ibid.
36. Ramstad, op. cit.
37. Salter, op. cit.
38. Ibid.
39. Ibid.
40. Ramstad, op. cit.
41. Ibid.
42. McHugh, op. cit.
43. Salter, op. cit.
44. Ramstad, op. cit.
45. Salter, op. cit.
46. Verespej, op. cit.
47. Slater, op. cit.
48. Ibid.
49. McHugh, op. cit.
50. "Baan Extends It's Reach: Sales Software to Join Manufacturing Suite", Information Week, December, 2, 1996, p. 108.
51. McHugh, op. cit.
52. Ibid.
53. Lyons, Daniel.  "The Soul of a Gen-X Entrepreneur", Forbes, November 30, 1998.
54. Lyons, Daniel.  "The New Face of Artificial Intelligence", Forbes, November 30, 1998.
55. Hawkins, Lori.  "Trilogy Software Spins Off College Recruiting Program", Knight Ridder/Tribune Business News, January 13, 1999.
56. Cole-Gomolski, Barb.  "Web Service to Match IT Jobs, Grads", Computerworld, January  11, 1999, p. 20. 
57. "Finding the Next Generation", PC Week, February 22, 1999, p. 98.
58. McHugh, op. cit.
59. Ibid.