I have always been amazed by Pat Kennedy and OSIsoft’s ability to say no and then the implementation skill to make it pay off.
- With a dominant installed base in the Energy Sector and significant market share in other process related industries, OSIsoft resisted the urge for decades to expand into developing and selling a SCADA or DCS. They stuck with the historian / data management product niche, although they have continuously added to the analysis, visualization, interface and other facets of this data. And they have looked at other market sectors, such as data centers, that need this type of technology.
- Over the decades there most certainly were numerous offers to acquire OSIsoft. During the projected boom times some of these offers were likely quite large given their installed base and market position. OSIsoft said no and continued to grow and be successful.
There are other examples, such as not chasing Recovery Act money, and they are best characterized by their focus and execution.
At the OSIsoft User Group event they announced last year revenue of $210M and 750 employees. The revenue puts OSIsoft into the top 100 largest software companies in the US.
All this makes OSIsoft’s recent YES very interesting. In January, OSIsoft accepted a “significant minority investment” of $135M from Technology Crossover Ventures (TCV) and Kleiner Perkins Caufield & Byers (KPCB). If significant means between 10% and 40%, then OSIsoft’s valuation would be about $350M to $1.35B.
Business at OSIsoft is usually somewhere between good and great based on the limited revenue and growth numbers available. Why take the money? While some may have been to cash out the founders, the interest from a venture investor would be to fund some significant growth. Easy answer is that OSIsoft sees major new opportunities for data management related to smart grid and other Internet connected devices. There are a lot of other vendors looking at this space, so the funding may have been necessary to move fast enough to compete and hopefully win a large share of this space.
TCV and KPCB obviously think the future at OSIsoft is bright, but this also indicates that sometime, 1, 3, 5 years, there will likely be an event where the venture companies can capture the return on investment. The event could be an acquisition, public or private offering. But this does mean the corporate structure of OSIsoft is likely to change at some point.
(FD: OSIsoft has contributed time and software to Digital Bond research projects, most notably Portaledge, and has been a past sponsor of S4)
Image by teresatrimm