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CEO Interview: Thomas Kelly of MontaVista Software

Jun 12, 2006 — by LinuxDevices Staff — from the LinuxDevices Archive — 2 views

This interview occurred six days into Thomas Kelly's tenure as MontaVista's new CEO, and one day after his appointment was made public. It covers Kelly's plans for MontaVista, including potential acquisitions and partnerships, investments in new technologies and growth, and focusing on sound… business practices. Enjoy . . . !

Q1 — Thanks for taking the time to brief us. Can you provide some background on this period of transition for MontaVista?

A1 — Jim [Ready, founder and former CEO] has done a remarkable job of bringing this company to where it is today. He deserves great kudos and credit for having initiated this great adventure that we call MontaVista today. We believe MontaVista is positioned as well as any young technology startup company in the [Silicon Valley]. We've got market, technology, growth in market, incredibly deep technical capabilities, and I believe that we've got the tremendous financial resources necessary to compete in this market space. I am convinced that this is a hot market to be in right now.

Jim will focus on technology leadership inside the company, helping us keep on-course there. I will take on the role of driving and growing this company.

This is not a transition focused on entrenchment. On the contrary, this is a transition that's focused on growth, and accelerating growth. It's not focused on cutting back, but on investing, and driving the company forward. So, I'm just thrilled to be here, and I'm confident that the kinds of things I've done in the past are consistent with the kinds of things that have to be done here.

Q2 — Meaning mergers and acquisitions, and IPOs?

A2 — You got it. To that end, I will tell you one thing that I believe will be very important for MontaVista. We're going to invest heavily in our own organic capabilities of delivering features, functionality, stability, and high-quality commercial grade Linux. But also, we're going to be looking at a variety of applications and technologies that we think are complementary to what we're doing with embedded RTOSes, and to the markets that we think are important.

I'm not going to go into detail about what these technologies are, or where I'm going to be shopping. But that's something I'm looking at. I'm not likely to execute that within the first quarter that I'm here, but it's incredibly important, and I'll be talking with my team about some of the areas that we need to look at.

It may not all come in the form of actually acquiring somebody. You can acquire technology, and rights to technology, do collaborative work, integrate things — there are a variety of strategic relationships that fall short of acquisitions. But acquisitions are on the plate as well.

Q3 — There have been rumors about MontaVista being acquired. Is that also on the table?

A3 — What I have found is that with successful companies, and companies that have leadership, people knock on the door all the time. For years, in the City, I gave an M&A [mergers and acquisitions] seminar. I used to say that there are two kinds of acquisitions. When people knock on the door, it's because they like you and what you're doing, and they believe you're playing an important part in the marketplace.

We are not looking for an acquisition [of MontaVista]. I do not have any interest in finding an acquisition for this company today. We have great financial resources. We have growth in customers. We have growth in revenues, and we will continue to invest in this market. End of story.

Of course, as [CEO of] a private company, I can make those kinds of comments. I spent most of my career at public companies, where I have had to be very cautious about any kinds of rumors.

We are in the business of growing a truly standalone company that can take advantage of whatever financial markets are available — that would include public markets, private markets, whatever — to finance how we build this company.

Q4 — Each year, for the last few years, we have heard, 'this will be the year MontaVista turns a profit.' What would you advise at this time?

A4 — We could be profitable this year if we chose to be. That's that. I am not convinced that that is the right course for this company, but it's an option in front of us.

I think this is a time for investment, and that these markets are exciting. And, I believe that my board agrees. I made my opinions known before I walked in, and I believe my board saw some merit to them.

You evaluate that at all times, of course. But I think we have some investment opportunities that we'll have to wrestle with between now and the end of the year.

Q5 — During the past, say, 12 months, MontaVista has been less aggressive, from a marketing perspective. For example, we've observed that MontaVista's first actual press release seemed to occur almost six months into this year. Meanwhile, Wind River has been very aggressive in going after your business. So, you've had some strong competition come onto the court… Do you have any comments about that?

A5 — My comments will be brief, because I have been here only a very short period of time.

We have been less quiet from a marketing standpoint during the last 12 months than I would typically have driven. Where we have not been quiet, is that we continue to win business. We continue to go out and win where it counts.

A lot of times, it's more important for companies that don't win business to talk about their marketing strategies, instead of talking about what they can deliver in terms of products.

We can't just fall back on that and say that our product position carries us all the way, though. We will, in fact, be more aggressive in that area.

But on the other hand, I come from a school of thought that says you build a company based on delivering products, working with your customers, and being the best place to get the solution your customer is looking for. There have been other companies built with that same philosophy, where they did not invest heavily in what I call 'marketing programs,' in terms of advertising and public statements.

Our primary investment at MontaVista will always be in product marketing areas, will always be in the collaborative areas with customers… that's where the most work will be put in. But I think we can do a better job of giving guidance to the marketplace about the kinds of things that we're doing. That's on my list of things to focus on this year.

Q6 — In terms of the structure of the company, are there new VPs that you're planning to put in place? Any thoughts on that?

A6 —No thoughts along those lines. We've got a lot of good people here right now.

Our objective is building the company into the company we think it can be, accelerating growth, and continuing to stake out our leadership in the market for commercial embedded Linux operating systems. That's what we're focused on, and we've got a lot of good people here. Of course, we will also continually look to grow our team, and grow our talent.

I know there was some level of confusion organizationally over the course of the last year. I think my arrival here was intended to be a significant step toward growing this company, and getting it focused on how we compete.

And, I think the number one job of any CEO is to build his team. We've got a good team. I like what we've got. If we need to add resources, we will. I think the team here would endorse that as well. We're here to win, that's it. If we need to add resources to win, we will. If we don't, we've got a great team to fight with right now as well. I don't have any plans right now [to hire anyone], and I'm not talking to anybody.

Q7 — Currently, you serve on the boards of directors of Epicor Software, FEI Company, and SendMail. Will those appointments continue, and will there be any relationships between MontaVista and those companies?

A7 — There'll be no connection between the companies, and my primary role is the CEO of MontaVista. As two of those companies are public companies, I don't even make any comments about that. My primary job and focus is that I'm the chairman and chief executive officer of MontaVista, and I will always make sure that I give adequate attention to whatever responsibility I've taken on.

Q8 — Why did you decide to join MontaVista?

A8 — I concluded the following things. Open source is here to stay. Linux is here to stay. Linux as a real-time operating system, as an embedded operating system, is here to stay. MontaVista is the leader in delivering those embedded Linux operating systems today. I believe we'll see a continued transition and growth in the marketplace, and great market growth. Growth coming from what I call the 'organic' growth of mobile devices and carrier demands, as well as growth outside those areas in the traditional industrial space. But there's also a second factor of growth that got me incredibly excited.

If you look at the MontaVista customers today, which we have thousands of, they all started as having grow-your-own, roll-your-own Linux operating environments — people that invested in downloading their Linux, and tried to work with it to build their products, and then concluded along the way that getting a commercially supported product in Linux was the best route for them to have the most stable, deliverable Linux environment. We are going to see an increased migration of that kind of activity within the next several years. People have invested time learning about Linux, and they will be looking for ways to adopt a more commercially supported Linux solution.

The combination of those things provides for great growth opportunities. I like the fact that we have great market leadership. Jim Ready has established a great technology vision and technology leadership of the company, and I like the team that we have here.

I didn't get a chance to meet some of the rank and file technical resources and product people when I was looking at the company. But since I've been here, I've had multiple opportunities to have small group sessions with development teams. And I am just incredibly impressed with the talent that we have assembled at this company. We're going to do more with that talent. I'm going to give them an opportunity to really show their talent over the course of the next year.

So I'm here for that reason. I think it's a great opportunity to grow and build a company, and to have my fingerprints on a tremendous success story.

Q9 — We've seen several companies — TimeSys for example, and to a degree Wind River — shift away from a packaged embedded Linux distribution model in the last year, in favor of more tools- and services-oriented approaches. Do you anticipate exploration of any additional business models, in addition to, or in place of, the 'packaged OS' approach traditionally taken by MontaVista?

A9 — Yes. I'm not saying we're going to go there, but any time you're looking at an emerging market, you have to continuously look at the business model, and how you deliver your capabilities, your service, your product — that entire offering.

I look at MontaVista today, and my belief is that what we need to do, and what we will focus on doing, is delivering the broadest ecosystem possible for delivering high-quality commercially available Linux. That ecosystem includes services, collaboration, and design work with our customers. It includes the core of Linux itself, adding features and functionality and integrating into other technologies. We'll look at how to deliver that, and what model we'll utilize.

Whenever you see somebody delivering a product in your space, you need to evaluate that, and determine whether it's, you know, the 'next best thing,' or the right model to be using. Things are working for us in a lot of areas today, but I assure you that we'll be looking at all the models. There's a wide range of things under discussion, even outside the ones you mentioned.

Q10 — One of the chief criticisms made about embedded Linux is that it doesn't tend to be a 'complete' solution. Microsoft, in particular, makes comments about the level of integration.

A10 — With the maturity of a Windows solution, they don't have a hard time arguing the completeness. But also included in that completeness of the Microsoft solution is the completeness of the control they can exercise over you. There's lots of completeness that comes into that.

I think you'll see Linux solutions over time broaden over time, with a greater completeness of the components that are integrated into it. We understand that we need to look at solutions, in terms of building complete stacks in areas where we are competing.

Ultimately, it comes down to the [fact that the] customer is embedding Linux. They need it to be robust, high-quality, and stable. How you get compensated for that effort is the core question underlying the future of an open source offering.

Will companies pay for an open source offering? I believe companies will pay, because if they don't pay you, they have to build an organization internally to do that. And that will not be their core competency. It will always be something secondary to their primary business.

We believe coming to an organization like MontaVista that offers a more complete ecosystem supporting commercially quality Linux — that is how people will go over time. How they pay for that — subscriptions, royalties, professional services — there's a number of ways. But they are still ultimately buying that complete solution. How that model is delivered, we will always look at that.

Q11 — We've been following the embedded Linux market since 1999, so we've heard 'em all, but it sounds like you're saying a lot of the right things…

A11 — Am I? That's good to hear. After six days, I'm really just going with my instincts. Of course, if you listen closely, what I'm saying has less to do with embedded Linux, and more to do with how you run a good business.

Building a successful company that's delivering commercial quality Linux has more to do with how you would build any strong company. It comes down to quality of service, staying on top of features, responding to customers… all those things.

Companies generally go through a transition, and have to re-invent themselves as they're growing. MontaVista is no different than anybody else. We have gone through that, and will continue to go through that. And one of the reasons I'm here is to help the company navigate some of those waters as we go through it.

Q12 — Is MontaVista the first open source company you have worked with?

A12 — Yes. I'm getting educated very quickly. I did enough diligence in advance to know that there are things uniquely different about an open source company. But also, that doesn't mean you cast aside those things that are absolutely required for any successful software company.

We're pioneers in this space. When you're a pioneer, you set lots of trends. You get to learn the mistakes first. And you also have to learn from that and respond to that.

And so, this is the first open source company that I've ever worked with, and I'm learning very rapidly some of the differences, but I'm also bringing to bear some of the things that have to be executed whatever kind of software company you are.

Q13 — LinuxDevices has some materials which you might find interesting, in terms of learning about the embedded Linux market. In particular, we just published our annual market snapshot. And, we recently commented on a market survey from CMP that suggested that Linux is on the decline, which we don't agree with.

A13 — There are alternatives out there. You already mentioned Windows. Symbian is also an alternative. And, there are proprietary OSes.

The real success for Linux in these embedded spaces is going to come from an ability to deliver a complete solution. We need to do a better job of building more solutions, and more complete solutions. That's what's going to continue to allow Linux to grow.

I don't see any evidence that Linux is on the decline.

Q14 — We agree with you. We appreciate you taking the time to talk with us, and we can well imagine that on your sixth day on the job, you have a lot on your plate.

A14 — Yes, but you know, I love doing this. For the last couple of years, I've been doing a lot of venture work, and working with different companies. But the fact is, I love running a company. That's what I like doing. God willing, if I'm healthy enough, I'd like to keep doing this, and I don't know why I'd ever want to stop. That's what makes you get up in the morning. That, in addition to the consumers I have in my house as well. [laughs]

Thanks again for taking the time to brief us, and keep in touch.

About the interviewee — Tom Kelly has 26 years' experience working in executive leadership roles in the technology industry, from software start-ups to billion-dollar technology companies. As CEO of BlueStar Solutions, he saw the company to a successful acquisition by Affiliated Computer Services, a $4.5B IT and business process services company. Prior to that, he led Blaze Software to a successful IPO, and its subsequent acquisition by Brokat Information Systems AG. From 1996-1998, Tom served in the office of the president and as chief operating officer for Cirrus Logic, a $1 billion diversified semiconductor company. Prior to Cirrus Logic, he held executive roles at Frame Technology Corporation. Tom also served as chief financial officer at Cadence Design Systems. He currently is a member of the board of directors for Epicor Software, FEI Company, and SendMail, Inc. He earned a Bachelor's degree in economics from Santa Clara University.

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