Cloud to Government
By Amy Wilkinson
Stanford Business, Case: E-667
By Amy Wilkinson
Stanford Business, Case: E-667
The company must become a learning organization to outpace incumbents, and learning is largely about iteration. How quickly do you accept your mistakes and how courageously can you fix them? The rate of learning and speed of execution will determine success.
—Zac Bookman, OpenGov Cofounder & CEO
At the beginning of 2012, Zac Bookman was living in a shipping container with two soldiers in Afghanistan. He was serving as an advisor to U.S. Army General H.R. McMaster and the Anticorruption Task Force on a tour with the United States Department of Defense. His co-founders Joe Lonsdale, Dakin Sloss, and Nate Levine were in the United States ready to get going on the start-up they had been discussing for months. Compelled by the mission and what Bookman described as a collective “naivete” about the challenges that lay ahead, they dove in head first and started the company. Lonsdale and Bookman wrote the first checks and assumed board of directors positions with Lonsdale as Chairman for what was then called Delphi Solutions—the name later changed to OpenGov Inc. Sloss and Levine, as CEO and CTO, respectively, got the company off the ground in Los Altos, California.
Fast forward ten months and Sloss had stepped out of the company. Levine had returned to Stanford University—he had taken a break his junior year to start the company and later came back in to help in multiple key business roles after finishing his degree. Having returned to the United States earlier that summer, Bookman was now running the company. OpenGov began the year with an ambitious vision to build the “Government Cloud” and replace years of old, broken back-office systems in America’s state and local governments. Yet nearly a year in, the company was experiencing classic start-up struggles: team changes, no revenues, a mere prototype of a first product, and no clear product roadmap, strategy, or product market fit.
Bookman left a promising career in law and foreign policy to embark on this entrepreneurial journey. Before working at the International Security Assistance Forces in Kabul, Bookman studied corruption in Mexico on a Fulbright Fellowship and served as a law clerk in the federal judiciary. Although he had encountered a range of new and challenging experiences, including helping Lonsdale start Formation 8, a leading venture capital fund, building an enterprise software startup was even more difficult than he expected. Bookman wondered to himself, “What have I done? What should we do now? Should we give investors their money back?”
The idea for OpenGov grew out of a nonprofit, which Lonsdale started in 2010 with a couple of other technologists (including Levine) from his alma mater, Stanford University. Bookman served as a board member. The purpose was to study the California budget crisis after 2008, when local governments across the state were caught by surprise as the nation-wide financial crisis dried up their revenues. Analysts were concerned that 12 cities in the state might go bankrupt in the aftermath of the Great Recession of 2007-2008, and three actually did: Vallejo, Stockton, and San Bernardino. The team found it alarming that “these bedrock institutions were not on bedrock at all.”
It was a cocktail of dysfunction: At a time when more residents than ever were turning to their local governments for help in the depths of the recession, governments were struggling to maintain services and fulfill their basic charters. “We have to solve this,” the team noted, reasoning, “What could be more important?”
In deciding whether to press on after early setbacks, Bookman knew that the company had a few key ingredients to work with: 1) Lonsdale’s credibility and connections had enabled the company to raise a healthy round of seed funding; 2) early recruiting by Sloss and Levine had brought in a core group of smart, passionate people eager to tackle these problems; and 3) the initial product prototype had attracted interest from several governments across the state. With those factors in mind, Bookman believed it was worth the risk to fight for the mission.
Lonsdale was steadfast in his commitment: “When there is a huge problem critical to solve for society, there is often a great company to create.” Bookman doubled down on the company’s ambitious vision by getting back to the basics:
We pared the team down to the best people we had, set to work focusing on small goals, and tried to create any momentum we could. Hire one engineer, sign one customer, build one feature. I spent the holidays reading a three-inch thick reference book on government finance. Our senior engineer Mike Rosengarten assumed the CTO role, and together we started building brick by brick.
The premise behind “finding the gap” is that by staying alert, entrepreneurial leaders can spot opportunities that others do not see. They keep their eyes open for fresh potential, a vacuum to fill, or an unmet need to satisfy. To do this, they tend to use one of three distinct techniques: transplanting ideas across divides, designing a new way forward, or merging disparate concepts. Entrepreneurial leaders who master these approaches are characterized by Professor Wilkinson as Sunbirds, Architects, or Integrators, respectively.
One thing the OpenGov founders did well was to talk to customers early and often. Sloss, in particular, listened to customers’ ideas, kept an open mind, and identified market needs. At the start, the OpenGov team spent considerable time with the management of the City of Palo Alto, including City Manager Jim Keene, CFO Lalo Perez, and CIO Jonathan Reichental. They learned that the City of Palo Alto had paid more than $10 million to SAP for an ERP system—Enterprise Resource Planning software for accounting, HR, utility billing, and other transactional processing functions—that came with green screens and was delivered on 20 disks.
As the founders talked to more governments and experts, they saw a pattern. The State of California was using an accounting system written in COBOL, the programming language most popular in the 1960s. These types of on-premise systems were disconnected from the Internet, meaning that data and information about government operations were siloed across multiple systems. Users often had to spend long hours running queries or conducting analysis in tools like Microsoft Excel, and they were forced to pay consultants to build integrations and custom workflows. Tracing the many gaps in these systems, the team started laying out a vision to fill the gaps with modern cloud-based solutions (see Exhibit 3).
Early on, Sloss and Levine, and later Bookman spoke to at least a dozen governments and a multitude of experts to determine which solutions made the most sense to build, and in what order. One expert they spoke to, Mike McCann, served as Assistant Finance Director for the City of Monterey and previously as CFO of Ukiah, California. McCann was just a few weeks from taking an early retirement when they met. As he put it, “I had a plane ticket to Hawaii, where my sister lived, in my pocket.” After ruminating on the meeting, however, McCann called Sloss and said, “I have been waiting 20 years for this vision, and I’m so inspired that I will drive from city to city to sell this.” After speaking with Bookman, who was on his way home from Afghanistan, McCann joined OpenGov. He closed OpenGov’s first paid engagement with the small town of Bishop, California; ran the early deployments; and then helped recruit and manage a team of subject matter experts that left the public sector to join OpenGov on its mission to empower more effective and accountable government.
Having seen a host of challenges stemming from the disconnected nature of on-premise legacy ERP systems, Bookman shaped the new company’s product roadmap to progressively address those challenges. The first product, Transparency, provided digital budget data visualizations using the government’s own chart of accounts and a pivot table-like functionality to allow the user to move deep into the accounting data while starting from an intuitive one-screen summary of their income statement and budget. Transparency addressed the challenge of presenting complex data in a format that internal and external stakeholders, like citizens and legislators, could understand.
Palo Alto launched the product as the nation’s first interactive digital budget. “Cities started writing to us, and saying, wait, how do we do this? As we began working with multiple cities, we saw more of those antiquated green and white screen systems and started learning the market and its pain points,” Bookman explained.
OpenGov had “found the gap,” and the Transparency product helped create the first category where the company would be a market leader. The category would grow to include open data portals for accessing public information, and a broader set of public engagement technologies to tell data-rich stories, issue surveys, and conduct online forums. The State of Ohio bought a piece of Transparency for every local-level government in that state, eventually bringing on more than 1,000 governments to the OpenGov platform. As a result, Ohio vaulted from number 46 in transparency in the nation to number 1 three years in a row, according to the public interest group U.S. PIRG.
Drive for Daylight
“Driving for Daylight” refers to the long-term focus of entrepreneurial leaders. As race car drivers round a corner, their eyes scan the road immediately ahead before assessing the furthest visible obstacle. Drivers move too fast to hang up on any individual bump ahead of them, or to focus on the individual positioning of the cars nearby. The only way to victory is to locate the best path forward quickly, then fix one’s eyes on the next turn and have the car follow. Similarly, entrepreneurial leaders can set the pace in a fast-moving marketplace by recognizing developing patterns in the market and how they can fit in with the future goal, without being distracted by the bumps along the way.
Although they set out to build a modern ERP company that would power governments across the country and eventually replace legacy systems, Bookman and the team initially had to focus on small goals. “We needed to win some customers, gather data, start the product feedback loops, and get the revenue machine turning,” he explained. It would take years to build the product architecture, sales and engineering skill sets, industry experience, and professional services capability that the company would need to deliver something genuinely new and mission-critical.
The team learned early on that selling technology to state and local governments requires focus and fortitude. They pounded the phones, traveled to conferences, and learned to cope with the sting of repeated rejections. “I remember conference goers cutting a wide path to stay away from the weird new govtech booth with flashy screens full of colorful charts,” said McCann. In time, Bookman and McCann were able to gain an audience with forward-thinking government operators who knew the public sector needed to leverage technology to drive efficiency and accountability.
After grinding for a year and a half on this new category, the company won a market leadership position with its vision for the future and attractive technical functionality. Notwithstanding the progress, however, it had become clear that the Transparency category commanded low-prices and limited user engagement. It wasn’t alleviating daily pain points for most senior executives and, given the expensive and lengthy sales cycles, Bookman feared the company would struggle to recoup the heavy investment required to build and distribute such a lightweight point solution. The company had to move further into its product strategy rather than just invest resources in scaling up the first solution.
Bookman pushed the team hard to embrace Reporting and evolve the messaging and positioning in the market toward this higher-price point, internal set of use-cases. This shift did not come without opposition. Well-intentioned employees and even executives questioned the company’s strategy, as they had come for “Transparency” and interpreted the evolution as veering from the mission. It was also the first taste for Bookman and the team of how hard it is to “reposition” a company in the market—customers were just starting to learn about OpenGov as the Transparency company. What did that have to do with internal operations?
For those governments that did understand, they had significant product demands: Could the product handle encumbrances? Could it drill from the summary level down to the transaction? Was there Single-Sign-On? Could the platform meet their enterprise security requirements?
As it started gaining market share in Reporting and earn higher price points, lower-priced competition from larger horizontal players like Tableau and Microsoft PowerBI began to affect deal cycles. Bookman could see that Reporting (like Transparency) was not a standalone product and that the company had to get to more mission-critical workflows (like budgeting) that had higher end-user adoption and thus higher price points to support a growing and expensive direct sales force.
OpenGov made the decision to start building Budgeting at an intense E-team offsite in 2015. At the time, feature requests were pouring in for Reporting, complicated deployments were weighing on the team (it’s especially hard to deploy nice-to-have products because the buyer often fails to prioritize the implementation), and short-term sales milestones were required to achieve the next round of funding. Bookman recalls the discussions at the offsite: “Half the executive team was not in favor of going into Budgeting, wanting to pursue reporting improvements like cutting-edge comparison capabilities so governments could learn and share from one another. After significant deliberation, I figured we had to build budgeting because customers “come for the tool and stay for the network,” not the other way around. “I wouldn’t sleep well at night if we did not make this bet.” Multiple employees, including some executives, ended up leaving in the following months.
After more than a year of development, the Budgeting & Planning suite launched late in 2016 as a prototype that would allow government departments to submit and automatically roll up their operating budget proposals. This promised significant time savings over what had been laborious and patchwork process. Agency leaders would email Excel files or deliver paper requests to a central budgeting office, which would then have the unenviable job of collating hundreds of thousands of rows from many different documents within a spreadsheet and ushering the budget figures through countless changes and levels of approval.
OpenGov now has an array of modules in the suite that streamline Capital Planning, Workforce Planning (personnel cost forecasting), and the online publication of the government’s Budget Book. As they allocate each dollar in OpenGov, cities, counties, and state agencies can track expenditure plans according to the priorities or goals of the community, then report upon and communicate this information up and out to key stakeholders. The product suite evolution drove price points higher, usage spiked (particularly during budgeting season—for California, this is the first half of the year, leading to a June 30 fiscal year-end), and sales cycles became more predictable.
But by 2018, the relatively quick development of products with distinct use cases had created internal confusion and lack of alignment. Teams of employees focused on different product lines, each of which had different buying and implementation cycles. Many customers did not recognize the company that they had first engaged with years prior, and it proved difficult to update their understanding as to what OpenGov now offered and how valuable it could be to government operations.
Bookman knew it was imperative to have the entire company aligned in order to take a unified product suite to market in a coherent way. “It felt existential,” he explained. “Without a single identity for employees to sign on to and a single message that could be drummed into the market, the pace of the company’s development and growth would stall.” In June 2018, after missing its first-quarter target, Bookman called a meeting for the company’s extended leadership team—over 30 managers, directors, VPs, and C-level executives.
He opened the meeting by announcing that OpenGov was a Budgeting company. “This is not a transparency company, not a reporting company, not a data company, not an analytics company, and not a BI company. We are a budgeting company.” The room was silent, and a little confused. Bookman continued, even more strongly: “Anyone who does not understand this will have the opportunity to be educated and trained on this. But we must be one team on one mission.”
McCann put a picture on the projector dating back to summer 2012. It showed a photograph of a large whiteboard-painted wall in the old OpenGov office, which some affectionately called a “three-bedroom apartment,” depicting the workflow of his former municipal budgeting process at the City of Ukiah. He reminded the team that “even in OpenGov’s early days, the long-term vision had been to grow into a Budgeting company,” and then later ERP. David Reeves, at the time the company’s chief revenue officer (he would later become president), told the team: “This is our chance to get to the next level, to step up towards our north star of $100 million in revenue.”
After a long pause, Bookman looked across the room of leaders and asked, “Are you on board? Who’s coming with us?” The group rallied. And the company delivered a record second quarter. In fact, the subsequent three quarters flowed more smoothly than any in the company’s history. Not only did OpenGov beat its quarterly and annual targets, but Reeves and the revenue team began to accurately forecast on future quarters.
As OpenGov steadily gained a leadership position with its more mission-critical Budgeting & Planning suite, the next step in its evolution was to deliver on the company’s original dream of a modern ERP designed for government. The pieces of the puzzle came together through two strategic acquisitions.
The first piece solidified in late 2018, when OpenGov completed the acquisition of an established, bootstrapped financial management system provider in Texas. OpenGov had partnered with the company, known as STW Inc, a couple of years earlier during its Reporting push and saw a hidden gem. The company was small, founded in 1992, with on-premise software and roughly 85 customers. Although it did not scream “industry-disrupting technology” on the surface, the company had a couple of key attributes that made it a great base from which to build the eventual OpenGov ERP Cloud – 3,000 screens of mature, robust accounting, payroll, and utility billing software and decades of subject matter expertise in extremely complicated municipal workflows and government business processes.
OpenGov worked in stealth to “forklift” the product to the cloud and integrate it with the Budgeting & Planning suite as well as the Transparency & Reporting platform, where the early products had been aggregated and packaged. OpenGov CTO Ammiel Kamon set about blending different ‘build’ cultures and articulating a multiyear product roadmap to set the Financials suite up for a true cloud transformation.
An additional piece of the ERP puzzle came at the end of 2019 with the acquisition of a company in Boston that boasted one of the only fully cloud-based permitting, licensing, and code enforcement (PLC) suites in the market. Founded 24 years prior and known as Viewpoint Inc., the company had rebuilt its software in a multitenant environment and was starting to see significant growth from its humble origins in New England. It had never raised outside capital (a feature of many established companies in this industry, given the long build and distribution cycles) and yet was eager to invest further in the product suite and take it nationwide. The team aligned around the vision, culture, and ambition of OpenGov to build the ERP Cloud. And beyond the bread and butter PLC use-cases, the product also had robust workflow capabilities that held the potential for new opportunities such as administering grant applications or even invoice approvals.
Eager to make bold moves and execute on the compelling and shared vision, Bookman arranged a Series D financing, in part to underwrite the transaction. The acquisition was completed in September 2019, after almost $90m in transactions in the prior sixty days, including an equity raise, a small debt line, and the M&A.
Rebranded as OpenGov PLC, the suite found success in the market as cities and counties responded to the prospect of a modern PLC system coupled with the vision, mission, and enterprise sales and services resources of the broader company.
On April 28, 2020, OpenGov launched its Cloud ERP to the public consistent with its founding vision. The efforts to expand from a market-leading Transparency & Reporting platform and then Budgeting & Planning suite to the complete back office and robust citizen-facing suite was complete. After eight years of development, governments could now run the vast majority of their administrative functions entirely in the cloud using the modern technology that OpenGov’s founders initially believed they deserved.
“Fly the OODA Loop” is a way to emphasize how entrepreneurial leaders master fast-cycle iteration, continuously updating their respective assumptions. Like legendary fighter pilot John Boyd, who pioneered the idea of the OODA loop—Observe, Orient, Decide, and Act—entrepreneurial leaders have to move nimbly from one decision to the next, observing, orienting, deciding, and acting in rapid succession. Those who master fast-cycle iteration can, in short order, gain an edge over less agile competitors.
For Bookman, fast decision making was key to the success of the business. He explained:
Some of the biggest mistakes I’ve made in my journey as CEO occurred from not moving quickly and making the hard decisions. I’ve also seen businesses die when founders or others are too averse to conflict and to change.
OpenGov was not new to acquisitions when they acquired the Financials and PLC companies in 2018 and 2019. The first acquisition dates back to 2016 when the company got the opportunity to showcase its ability to “Fly the OODA Loop.” (see Exhibit 4). An unexpected competitor in Seattle named Socrata came on the radar. Socrata was a ten-year-old company with a separate but related product called Open Data. The company was aggressive. Its sales reps were calling through OpenGov’s customer base, trying to steal business and sow confusion about the products. The competitor’s marketing department copied OpenGov’s website and messaging wholesale. At one point, upon seeing an upcoming OpenGov webinar, Socrata created a webinar on the same topic, running two hours beforehand on the same day, with the same sponsor (the Government Finance Officers Association).
Refusing to sit still, Bookman and the team began studying the market for open data products and saw that indeed the two spaces would converge. It was critical to act, and the question then was whether OpenGov should partner, build, or acquire the missing capabilities. Bookman first approached the CEO of Socrata to explore the option of a partnership, but it became apparent that the trust level was not high, and the competitor was too far down its path. OpenGov had to compete by either developing its own product or acquiring one. Given severe time pressure and a corresponding lack of product knowledge around this adjacent space, OpenGov looked to acquire.
After surveying the market landscape (and nearly overpaying for a company that turned out to have serious tech deficiencies), OpenGov found a small company in New York that had top experts in the open source open data market. The leaders aligned on vision and culture and the OpenGov team acted quickly to acquire the company on April 1, 2016. The acquisition proved a game-changing decision, as OpenGov quickly built out an Open Data business and began to win marquee accounts across the country, including major agencies in the State of California and cities like San Antonio, TX, Milwaukee, WI, and Phoenix, AZ.
In combination with its other products, the company was equipped to beat Socrata in the converging space. With its growth rate slowing, Socrata put itself up for sale and was acquired by Tyler Technologies, a public company and the largest player in the space. Although it did not intend to go into the Open Data market, OpenGov found the move synergistic and it demonstrated to the executive team that inorganic growth could be a powerful part of OpenGov’s overall strategy.
Less than a year and a half later, another company approached OpenGov. This time, rather than trying to kill OpenGov, the company—Peak Democracy, located in Berkeley, CA—asked if OpenGov would be interested in acquiring it. Peak Democracy’s two co-founders had bootstrapped a profitable business over nearly ten years that boasted more than 100 customers and a market-leading “Open Town Hall” application, which allowed governments to run online forums and surveys to increase public participation. One founder had health problems he needed to focus on and, although both co-founders were ready to move on, they felt it very important that their “baby” find a home with a mission-driven, values-aligned company with an ambitious product vision. Knowing the integrity of the two co-founders and the quality of their product, Bookman figured this could be a good tuck-in opportunity to expand OpenGov’s product set and customer base.
OpenGov completed its second acquisition in a relatively straightforward fashion. The move reinforced the potential in building a corporate development muscle to increase the company’s ability to execute such transactions and speed growth. Given the expense required to build a direct sales go-to-market model, each additional product in a sales representative’s ‘bag’ can help raise the average sales price on new deals and lower the cost to acquire a dollar of revenue.
Similarly, given that governments require a wide breadth of product features (often to match their legacy systems or workflows), it can take many years and large R&D budgets to build organically toward these specific needs. Accordingly, the OpenGov team has embraced acquisitions as a cash-efficient, high-velocity method of growth and part of its long-term plan. A fifth acquisition, a small tuck-in, is under term sheet as of this writing.
Entrepreneurial leaders are never strangers to failure, and the best leaders often fail the most due to the difficulty of the problems they attempt to solve and the number of tries they make. The hallmark of a successful entrepreneur might be the resilience to press on and use the lessons learned from small failures to avoid potentially catastrophic mistakes and make the right future decisions. To practice and master this skill, entrepreneurs set failure ratios, place small bets to test ideas, and continue to develop resilience.
“What is my failure ratio? It’s probably 49 percent,” Bookman explained with a smile:
It’s pretty tough to do an honest assessment. But it’s high. The real challenge and determinant of success is if you can admit mistakes and fix them. Very few mistakes are unfixable and the right question is how quickly you accept that you’ve made a mistake and how courageously you go solve for it. Unlike fine wine, as they say, mistakes do not get better with age.
Assembling an effective marketing team was an area of challenge for OpenGov. Bookman encountered problems as he searched for the right leaders and faced multiple failed hires over the years. Few marketers from top tech companies had deep experience in an old-line industry like government. “As I like to joke, most people go to Silicon Valley to get away from government,” Bookman noted. By the same token, while there were people with experience marketing to government groups, few of them could match the pace, creativity, and X-factor that the OpenGov team craved.
Replicating private sector marketing tactics and using traditional enterprise playbooks around demand generation ignored the nuances of marketing to governments. In one example, an early VP of marketing pounded the market with email blasts. Bookman recalled, “At one conference, a customer I knew approached me, visibly upset. She implored us to ‘please stop emailing all the time.’ A prospect walked by, overheard this, and chimed in with his own demand to stop the email bombardment.” Bookman eventually had to let that VP go, which caused turmoil on the team, and prompted a reset of the entire marketing strategy.
After more mistakes, Bookman asked David Reeves to take over marketing. Reeves decided to change course and spend time without senior hires who had “been there, done that.” Instead, he promoted talent from within. This new strategy proved successful for a couple of years, as rising directors took the reins and began moving faster on key initiatives. Bookman learned that one key to creating a strong company is the ability to have tough and authentic conversations early with employees, and help them move on if there is not a good fit.
Perhaps the most significant strategic mistake for the company involved over-investing in sales early on. “At various times, you misread factors in the market that tell you things may be better than they are. It’s very hard in enterprise sales, particularly government technology,” Bookman explained:
You’re making large investments to get salespeople trained up before they are productive and earning revenue or paying for themselves. If you are too slow to hire and train, you leave money on the table. If you move too fast, you’re spending on people and things that earn you nickels, when you could have waited to spend on people and things that earn you silver dollars. When the hourglass is ticking on an unprofitable company, getting these choices right can be live or die.
OpenGov had two problems in this regard: it hired too many salespeople too quickly, and it also hired the wrong salespeople. The first problem highlighted the need for greater predictability in product development and planning. “Looking back,” Bookman remarked, “the money spent increasing the sales force would have better served the company in the form of investments in more rapid development of the product or just retaining dry powder and extending the run room.”
The second problem was more nuanced. As OpenGov moved upmarket from a point solution to an enterprise solution, it needed a different type of salesperson. Selling Transparency was possible over the phone with lower-cost and less-experienced transactional sellers. Their focus was on volume and calling through the accounts presented to them. OpenGov’s Budgeting and Planning software, and the full OpenGov ERP Cloud, require a higher caliber of selling—individuals who can multi-thread many stakeholders in a complex selling process, lead executive and board-level meetings, navigate procurement processes, and mobilize internal product and deployment teams.
One of Reeves’s first moves upon arriving at the company was to transform the skillsets and talent on the team, while re-balancing and right-sizing the sales staff. The transformation of the company’s workforce from one geared toward a lightweight point solution to a more mission-critical suite was painful and costly, but essential to the company’s long-term viability. Moreover, larger enterprise wins pushed the R&D organization to undertake its own transformation both in personnel and in process to keep pace with increasing product and customer demands. A flywheel started turning.
Entrepreneurial leaders bring together the brainpower of diverse individuals through on-and-off-line forums to solve multifaceted problems. They harness cognitive diversity to build on each other’s ideas. They network minds. To achieve this, they design shared spaces, gather tiger teams, play and socialize together, and build work-related competitions.
Alongside more typical Silicon Valley talent, OpenGov recruited top government finance minds like Mike McCann and Kent Hudson as well as advisors like George Shultz and Larry Summers. When top people in an industry want to join a company’s mission, that is often a good sign for the company’s vision and potential. They pair with management talent to help the company dial in to the vertical. OpenGov brought in a diverse array of other viewpoints, from Ph.D. engineers to college dropout designers; from venture capitalists and corporate board members like Marc Andreessen and John Chambers to wide-eyed recent graduates and do-gooders; and experienced executives like CFO Paul Denton to help rationalize the company. The common thread among the team is an intense mission-drive and an appreciation for a performance-focused culture. For Bookman, “so much of the fun and upside rests on the quality of the people and team. You want people who are passionate and take the initiative. I prefer the type of leader that tells me what to do.”
Networking Minds, however, often comes with conflict. The diverse team at OpenGov felt uncomfortable at times. Bookman explained, “My job often feels like one long series of awkward conversations. If you are not having awkward conversations, you are probably not doing your job.” Building on the ideas of others requires the team to iron out its wrinkles. “It means you’re talking about problems like a professional. I judge the quality and success of our managers in no small part on their ability to surface conflict and create alignment,” Bookman noted.
At the June 2018 OpenGov leadership alignment meeting, Bookman’s focus on facilitating difficult conversations played out. After detailing the company’s strategic vision and history, Bookman took out his stopwatch and gave each employee two minutes to respond, ask questions, and state what they could do to improve execution. After all the employees present had stated their position and voiced excitement and concerns, the team arrived at a unified path forward by building on each other’s ideas.
Bookman didn’t stop there. He made his rounds at the office in the weeks that followed, stopping by desks one-by-one to look people in the eye, and reiterate the new positioning. He did this with engineers, accountants, customer success managers, everyone. The result? “We all drove toward a goal of reaching 200 Budgeting and Planning customers for 2018, and we ended the year with 280, far surpassing our goal and more than doubling our 2017 number,” Bookman recounted. He had the vision and felt a need for unity around the strategic focus, but it was the other leaders’ ideas that surfaced at that meeting and their buy-in that made the vision tangible and the execution possible.
The transition to OpenGov 3.0 and the OpenGov ERP Cloud has presented fresh challenge, but Bookman hopes it will be a little easier given the company has built some “repositioning muscles.”
In an increasingly transparent and interconnected world, generosity helps make entrepreneurial leaders more productive. Entrepreneurial leaders unleash generosity by helping others, often by sharing information, pitching in to complete a task, or opening opportunities to colleagues. Offering kindness and exchanging favors might not seem like a skill, but it is an essential way to strengthen relationships and an increasingly important skill.
Small acts of support and assistance are fundamental to how Bookman runs OpenGov. “We have been given so much. We want to give back to our communities, but also to each other,” he explained. As an example, when Bookman found out that an employee’s father was struggling with cancer, it hit home—Bookman’s own mother had died from cancer earlier that year. Bookman immediately wrote the employee a personal note and shared his own painful story. When the employee returned to work, Bookman recalled, “We went out to dinner and I told him that we are here to support him in any way possible.” Subsequently, Bookman received a beautiful note back from the young man in appreciation for the support and encouragement of the extended OpenGov team.
These acts of camaraderie permeate the OpenGov culture. On October 8, 2017, for example, engineering intern Noel Parisi and her family lost everything in the Tubbs Fire in Northern California. Upon hearing the news, the company made a contribution to a Go Fund Me campaign that Noel’s manager had created the day after the devastating wildfire. Bookman spread the news, and as a result, 8VC, one of the investors in OpenGov, also donated later in the month. At the November 2017 All-Hands meeting (known to OpenGov employees as the “State of the Start-up”), Parisi stood up and thanked her colleagues for their tremendous support in helping her get her life back on track. Parisi continues to work at OpenGov, becoming a full-time employee in December 2017. “Noel is a spirited and team-oriented colleague who occasionally handles office tours for VIP visitors because of the amount of positive energy she brings. She even interviewed California State Treasurer Betty Yee in a fireside chat about politics and women in leadership in front of the whole company.”
Bookman believed early in the power of building an ecosystem around relationships and paying it forward. He had seen the benefits accrue in both directions. In 2016, for example, John Chambers, former chairman and CEO of Cisco, met Bookman at the World Economic Forum (WEF) in Davos. The WEF had named Bookman and the company a “Tech Pioneer” and invited him to speak in Switzerland on a panel titled “The Transformation of Tomorrow,” alongside Sheryl Sandberg and Satya Nadella. Chambers came up after the talk and offered to hold a one-hour mentorship session in the Strategic Partners Lounge. After spending an hour detailing business challenges and gleaning insights and feedback, Bookman stopped and asked Chambers, “Why are you talking with me?” It surprised Bookman that such an accomplished leader would lend him this much time on his business challenges and opportunities. Chambers explained that his own mentors had been Lou Gerstner (former CEO of IBM), Sandy Weill (former CEO of Citibank) and Ariel Sharon (former prime minister of Israel), and that it was his time to give back.
After more meetings and mentorship, Bookman asked Chambers to join the OpenGov Board. Among many lessons imparted, Chambers coached Bookman to soften up as CEO. With so much pressure and stress across the organization, Bookman needed to work on slowing his reaction to situations and toning down the intensity. Chambers advised him to become more predictable and to bring a more calming influence to the company—so employees could stay focused and execute on their work without being confused by organizational changes or sideswiped by new ideas. In the months that followed, and thanks to coaching and programmatic work on People Operations, Bookman’s approval rating on Glassdoor, a website where employees and former employees could review companies and their management anonymously, grew from 57 percent to 89 percent.
“For a CEO, a key measure of success is often how much energy you have to give to your employees, company, and mission,” says Bookman. In the government technology industry more broadly, Bookman frequently talks about the importance of building a positive ecosystem where entrepreneurs and companies could respect and even help one another in service of the greater mission around strengthening both country and society. The many personal relationships that Bookman and the company have formed provides a positive morale boost to the company and its employees. With entrepreneurs and founders more likely to work with and partner with a mission-driven company rather than a hedge fund or private equity-backed rollup, it’s likely the OpenGov ecosystem helps broaden the potential M&A pipeline as well.
OpenGov started 2020 with a bang by launching the OpenGov ERP Cloud. The technology has evolved from a single point solution into the industry’s most complete government software cloud, consisting of a Budgeting & Planning Suite, a Financials Suite, and a Permitting, Licensing & Code Enforcement Suite, all sitting on top of a best-in-class Reporting & Transparency Platform. The company has gone from about half a dozen modules of software to more than 20.
In addition to the excitement, the challenges ahead are manifold. How do you efficiently deploy and sell entire new, complicated product lines? How do you reposition the company in the eyes of employees and the market yet again? What will the incumbents do now? OpenGov must navigate a market in a period of rapid transition and consolidation. Should it go bigger and broader, or double-down on its success in the Budgeting & Planning space while slowly expanding into ERP? If the company grows slowly, will it get swallowed up by larger incumbents or fail to “shoot the gap”? If it moves too aggressively or too broadly, will the company outpace its expertise and capabilities and “get too far over its skis”? Would investors or debt-providers fund even more aggressive investment and expansion?
At least six private equity-backed roll-up plays involving the merger and acquisition of multiple companies are taking place in the market. Two examples include Granicus, which was bought by private equity firm Vista Equity Partners (Vista); and Central Square, jointly owned by Vista and Bain Capital. Larger competitors include Tyler Technologies, Oracle, Microsoft, and Infor (Exhibit 6). As of the time of this writing, Tyler trades on the New York Stock Exchange under the ticket symbol TYL with a market capitalization of more than $14 billion on just over $1 billion in revenues.
For Bookman, the years ahead present a balancing act. There are heavy efforts to integrate and mature the product suites into a Branded House championed by Kamon as a powerful “suite-of-suites” including more than 500 operational processes, without which a government’s administrative functions cannot operate smoothly and effectively. The company must build professional services and deployment capabilities to match both the breadth of the products and the market opportunity and unique needs of complicated enterprise customers. And investors, particularly during recessionary periods, care about improving sales efficiency — how to take the OpenGov ERP Cloud to market as efficiently as possible. Given ambitious long-term goals for the company, striving to navigate a path to $100 million in recurring revenue and profitability, how should OpenGov balance near-term demands with long-term vision?
The company is now one of the largest non-PE, non-public companies in the space, yet it still has much to get right to live its vision for the long-term. Should it acquire more companies or focus on organic build? Should the company hunker down to outlast COVID-19 or put its foot on the gas as governments try to get to the cloud? Will OpenGov’s ERP Cloud immediately stake its claim in the market, or will it take time to establish itself and ramp up sales? Bookman and the OpenGov team have had to make many difficult decisions to get to this point and that theme will continue. It’s the double-edged sword of building a successful technology company from infancy to IPO.
Last Updated on August 4, 2022 by Jeff Neukom