Business Development

A wise man will make more opportunities than he finds.

--Francis Bacon, ``Of Ceremonies and Respects,'' Essays, 1625.

As we've seen, if we use any of Autodesk's cash hoard directly in the business, it increases the expenses we report, reduces our margins, and makes the company look less profitable in the short term. If we just sit on the money, after a while investors quite reasonably become restive. ``If you can't think of anything to do with the money, why don't you just give it back to us,'' they say, even though paying out profits as dividends subjects them (in the United States) to a second round of taxation.

The only way to use the money without directly increasing expenses is by investing it. These investments can consist of buying other companies outright, making minority investments in ventures, or purchasing products or technology which Autodesk can incorporate into its product line. Autodesk has, over the last several years, made investments in all of these categories.

Once it became obvious that Autodesk's growth expectations could be met only by finding additional products that generate revenue comparable to AutoCAD, using our strong cash position to acquire those products outside the company became a strong priority. This is as it should be; after all, Autodesk has no monopoly on good ideas for products nor on people able to turn ideas into reality. However, we must look closely at the kinds of products being sought and the criteria being used in the search to decide whether the candidates for investment we'll identify have a chance of succeeding in the software market of the 1990s.

Unfortunately, unless the goals and priorities of Autodesk's current Business Development effort have been seriously miscommunicated, it seems to me embarked on a quixotic search for something which in all probability does not exist: ``The Next AutoCAD.'' Autodesk needs additional products that contribute results comparable to AutoCAD, but to expect them to share the price, customer profile, and distribution of AutoCAD excludes any product within the mainstream of currently successful software packages.

We are said to be seeking to increase our sales by hundreds of millions of dollars a year by finding products which ``sell for $1000 or more per copy and can be sold through our AutoCAD dealer network.'' So, in other words, we're betting the future growth of our company on our ability to consistently identify products which sell for more than any other widely-distributed software and will be sold exclusively by a distribution channel which has demonstrated itself incapable of selling anything other than AutoCAD.

What's wrong with this picture?

When you adopt unrealistic selection criteria, you find unattractive alternatives. The desiderata that Autodesk is seeking in the products on which the company's future will be bet would have excluded every single successful product introduced since 1982 by Microsoft, Lotus, Ashton-Tate, Word Perfect, and Borland. What are the odds Autodesk will find not one, but several products that these companies have missed?

You can always find an investment that meets your criteria, but if your criteria are out of whack with reality, you might as well blow your money at the track where at least you get to smell the horses. A literal search for ``The Next AutoCAD'' always ends up with dorky stuff like overpriced high-end project management software. What a concept: jumping into the very top end of a market where the entry level is dominated by Microsoft Project, then slugging it out with a company five times our size, selling a product at more than twice the price, through a distribution channel a fraction as large. Why we could blow them away just like Boeing Calc (I'm not making this up) obliterated Lotus 1-2-3! Yeah, sure. And I am Marie of Roumania.

I'm all for business development; just look at how many products and investments I've brought in the door. But when we seek ``The Next AutoCAD,'' as we must, we have to use a little more imagination. When we find ``The Next AutoCAD'' it will look just like the last AutoCAD did back in 1982--a non-obvious product in a market waiting to be created, with a large body of potential users who haven't ever really thought about how useful such a product might be. It's that kind of product, whether it sells for $50 or $5000, whether it's sold in bookstores, by dealers, or door-to-door, that promises the kind of exponential growth we seek. Most companies never find a single product that grows the way AutoCAD has. If we hope to find a second, then a third, and then more, we're going to have to look for products that play as large a rôle in defining the PC software industry in the 1990s as AutoCAD did in the eighties. Those products won't look like AutoCAD at all; they'll seem, at first glance, just as unlikely to have a future as AutoCAD did when we started working on it. But seen through the right kind of eyes, in the context of where we're leading the industry, they can be chosen with confidence because they're going our way.