Tarantella's new chief talks money

Since Frank Wilde joined Tarantella as chief executive in December, he's brought in a new management team, and now a cool $16.4m in funding. ZDNet UK quizzed him about his plans to rebuild the company's fortunes

Tarantella has long lived in the shadows. Its Unix-based software, which provides remote access to applications running on Unix, Linux, mainframe and even Windows servers, has a fraction of the market enjoyed by its Windows-based competitor from Citrix.

In terms of exposure, the company pales in comparison to the SCO Group which, as Caldera Systems in 2001, acquired the name along with the operating systems division of the original SCO, within which Tarantella was then just one of several products.

The purchase of New Moon Systems in summer of 2003, was designed to give Tarantella a foot into Windows shops that don’t have the expertise or the desire to run the Unix-based heavyweight Tarantella product. Then, in December, the board of directors accepted a proposition from IBM and Dell veteran Frank Wilde, previously CEO of Ravisent Technologies, a Deloitte Fast 50 company. His plan was to bring in money plus a new management team to revamp the marketing, get the company back into profitability and get it re-listed on the NASDAQ.

On the day that Tarantella announced the arrival of the new cash reserves, ZDNet UK caught up with  Wilde to find out where the money came from, how it will be used, and what the plan is now.

Q: First, can you talk about how you came to be chief executive of Tarantella?
A: I have been at the company for two months now. Before I came here I was looking at a variety of companies and wanted to bring a team of people to one that we felt was significantly undervalued.

Tarantella was one of seven companies that fitted the criteria we wanted. The more we talked to Tarantella, the more we saw that it has a great number of enterprise customers, excellent products and excellent distribution channels, yet was never able to capitalize and turn a profit. I felt we could do good job in sales, marketing and product development programmes. So I approached the board with that programme.

How did the board respond?
They felt it was great alternative. They felt we need to get the company into profitability. Doug [Michels, the former chief executive who remains at the company as a strategic advisor] had led an effort that built great products, but my charter is to take the company forward on a balanced programme of building a business. This was very well received by the board. We wanted to be able to move forward in a way that solved three challenges:

    1. to get the company relisted and trading on the stock exchange
    2. to get the company to have a strong balance sheet and cash for future growth
    3. to implement programmes that could enable the company to become profitable

Over the past 60 days we have made big progress over points two and three. Of the $16.4m investment, over $15m will be net proceeds for the company. We will have a lot of cash on the balance sheet and this will help customers who are concerned about buying from company that did not previously have strong financial backing. We have also done substantial work necessary to get the company re-listed.

What timeline are you looking at?
It is our goal to be profitable by the end of the year on quarterly basis. We only have 100 people in the company, so operating expenses on a quarter-by-quarter basis are not that far away from profitability. 

And what does all this mean for your customers?
This move today makes it a lot easier for customers to buy our products. Many of the customers who have installed Tarantella are Fortune 1000 companies. Now we have to get those customers comfortable with where we are.

We have brought full compliment of management team, including a chief financial officer [John M. Greeley] who was formerly CFO at BIOS-maker Phoenix Technologies, a vice president of marketing, of corporate development and of sales. All have track records of achievement.

Did anybody leave as a consequence of this?
They all replaced the previous people.

What was the reason for replacing such a large part of the management team?
We want to take the company forward in a positive way. We wanted to extend the number of people on the management team responsible for sales around the world, and implement marketing programmes that would enable our channel partners to be more effective than in the past.

Where did the investment come from?
We brought in eight or nine investors who brought with them the $16.4m. They have confidence in the management team, really believe in this market, and like the fact that company has great customer references.

If you look at the space we are in there are some very significant trends that set the stage for us to be successful; the whole move to Linux, and the reduction in cost of broadband, are all trends that can accelerate customers using our products.

So what is their exit strategy? Clearly it is not an IPO, since you’re public already.
They believe our stock price is already undervalued. Their exit strategy is a stock price that is significantly higher than couple of dollars today.

So it doesn’t sound like this is VC money.
Some are fund managers, and none of them are typical venture capitalists, who would look to make money on the IPO. These guys are looking for companies that are undervalued. They are looking for a challenge, and the challenge for us is getting re-listed. We feel that is very do-able.

And what about your products? You can't have a strategy without those.
Our products are critical. One of the things we want to do with enterprise product is to market the heck out of it. Given the push by IBM and HP into the Linux world, it is important for us to get the word out. We have also established a whole bunch of partnerships.

Marketing is fine, but what about the products themselves?
Canaveral is a Windows-only product that competes directly against Citrix. We have one quarter of sales from that, and have new sales programmes that we are launching. We have new sales programmes for our partners. We have very high expectations, it is easy to use and install, and it gives our resellers more margin.

And of course we are continuing development: we have development operations in Leeds and in India. Basically the Leeds operation is responsible for Tarantella, and India is responsible for Canaveral. Doug is now focused on additional technologies we can embed into the product. He remains a member of the board, and we have him totally focused on looking at technology.

How do you find outsourcing product development to India?
I love it. This is the third team where I have had development teams offshore. Previously worked with development teams in Moscow, Frankfurt and India. It's a good thing. In this case the logistics are simple. When Tarantella bought New Moon there were some people in the company from India. We moved seven people over there, including the team leader and then hired locally. It was pretty straightforward.

So what’s the next move?
One thing we have implement is a whole new pricing programme. This will enable our largest customers to buy anywhere in the world off the same price list. So we're trying to make it easier for customers to buy from us.