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LEADERSHIP IN A CHANGING
ENVIRONMENT
SciQuest as a Case Study
Stephen J. Wiehe
FORWARD-LOOKING STATEMENTS
This presentation contains forward-looking statements. These statements relate to future
events or to future financial performance and involve known and unknown risks, uncertainties,
and other factors that may cause our actual results, levels of activity, performance, or
achievements to be materially different from those expressed or implied by these forwardlooking statements. You should not place undue reliance on forward-looking statements
because they involve known and unknown risks, uncertainties and other factors that are, in
some cases, beyond our control and that could materially affect actual results, levels of activity,
performance, or achievements. Other factors that could materially affect actual results, levels
of activity, performance or achievements can be found in SciQuest's most recent Annual Report
on Form 10-K filed with the Securities and Exchange Commission. If any of these risks or
uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results
may vary significantly from what we projected. Any forward-looking statement you see or hear
during this presentation reflects our current views with respect to future events and is subject to
these and other risks, uncertainties, and assumptions relating to our operations, results of
operations, growth strategy, and liquidity. We assume no obligation to publicly update or revise
these forward-looking statements for any reason, whether as a result of new information, future
events, or otherwise.
DISCUSSION POINTS
• SciQuest transformation timeline
• Our key leadership concepts
• My leadership misconceptions
• Principles we live by
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THE STORY OF QUESTIE
A LITTLE BEAKER AND A LOT OF MONEY
• $375M of Invested Capital
• $2.2B Market Capitalization
- Early 2000
• $60M Market Capitalization
- Late 2000
SCIQUEST.COM
• A B2B Exchange for lab supplies
– “Amazon.com for the lab”
• > 500 Employees
• $25M per Quarter cash flow burn
– (2 ½ Quarters operating cash in bank)
• $64M Revenues
– 2.5% Gross Margin (revenue less cogs) *
– $3,200 per employee
• Market Cap (‘00) $2.2B
• Enterprise Value less than $0
• A bank, a web site, a publishing company
and a software company
• A charismatic CEO
• A proud and headstrong culture
Timeline
• 1995: Founded
• 1999: IPO
• 2000: Dot com crash
• Feb 2001: New CEO
THE MINDSET
• We are a family.
• We are changing the world.
• It’s not about the numbers – it’s about doing something
different.
• Our culture is special – it’s something we are very proud of.
• Profits don’t matter – they will come with time.
• We can’t be wrong – we were worth over $2B.
• It’s only a short-term valuation problem in that the market
doesn’t really understand us right now.
• We are a new economy company.
THE CHANGE
A B2B Exchange for lab supplies
Understand how value was created
“Amazon.com for the lab”
500 Employees
Terminated over 425 Employees
$25M per Quarter cash flow burn
$2M per Quarter cash flow burn
2½ Quarters operating cash
in the bank
$64M Revenues
2.5% Gross Margin*
$3,200 per employee
$50M at year end ’00
Subscription fees
80% Gross Margin
Market Cap (‘00) $2.5B
Went private 2004/IPO 2010
Enterprise Value $0
Enterprise Value $25.25M
$375M of Equity raised
$20M of Equity raised
“It’s all about the vision”
“It’s all about our customers, shareholders
and employees”
“We are family” culture”
A new culture, which is our culture today.
COMPANY OVERVIEW
SCIQUEST TODAY
Market leader with $500M market cap
SciQuest is the largest publicly
held pure-play provider of cloudbased business automation
solutions for spend management
– offering deep domain
knowledge and a leading,
customer-driven portfolio.
Founded
1995
New Management
2001
• 500+ customers
• Proven ROI
• Highly satisfied customers
• 500 global employees
• Based in Cary, N.C.
Taken Public
2010
Acquired Upside
2012
Acquired CombineNet
2013
SciQuest GROWTH
1999
IPO
2004
Taken Private
2011
Acquired AECsoft
2012
Acquired Spend Radar
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INVESTMENT HIGHLIGHTS
• Multi-billion dollar, growing
addressable market
• Leading provider of spend
management software with
differentiated cloud-based platform
• Multiple long-term growth drivers
• Proven ROI and customer
success with
highly-satisfied customer base
• Recurring revenue driven by
multi-year subscription agreements
• Generating attractive long-term
growth rates, profitability and
cash flow conversion
SQI
NASDAQ:
CONSISTENT REVENUE GROWTH
34 Consecutive Quarters of Growth
$25.8
$23.5
$20.8
($ millions)
$21.3
$22.0
$17.6
$12.5
$12.9
Q1
Q2
$13.8
$14.2
$14.4
Q3
Q4
Q1
2011
$15.2
Q2
Q3
2012
Q4
Q1
Q2
Q3
2013
Q4
OUR KEY LEADERSHIP
CONCEPTS
KEY LEADERSHIP CONCEPTS
• Collaboration over consensus
• Proper use and respect of
power
• Respect and recognition for
the individual
• Focus on the ‘right things’
• Facts then opinions
- Environment
- Incentive programs
- Shareholder value
MY LEADERSHIP
MISCONCEPTIONS
CULTURE
is a tangible
result of…
LEADERSHIP
LEADERSHIP
and
MANAGEMENT
are not the same things
LEADERSHIP
LEADERSHIP MISCONCEPTION #1
• Leadership is a process
LEADERSHIP MISCONCEPTION #1
• Leadership is a behavior
Why?
• You lead others by what you do, not what you say.
• Transparency is a vehicle, trust is the key.
• It must be continual, not periodic.
LEADERSHIP MISCONCEPTION #2
• A leader needs to be ready with an answer
LEADERSHIP MISCONCEPTION #2
• A leader needs to be ready with a question
Why?
• Initial questions allow for clarification of the issue or problem.
• Questions allow for conflict without stating such.
• Questions allow you to send a polite message of incomplete
staff work without embarrassment.
• Asking for input or ideas could be viewed as weak or losing
power, which is a fallacy.
LEADERSHIP MISCONCEPTION #3
• A leader needs to be a great speaker
LEADERSHIP MISCONCEPTION #3
• A leader needs to be a great speaker, but an even better
listener
Why?
• Seek to understand – then be understood.
• At the center of every joke is a nugget of truth…
• You can listen and think faster than you can talk and think…
LEADERSHIP MISCONCEPTION #4
• Great ideas come from debate and conflict
LEADERSHIP MISCONCEPTION #4
• Great ideas come from an open, constructive and positive
discussion driven by questions
Why?
• “Facilitator” style leaders are more powerful than “Directive” style
leaders.
• Conflict creates situations where ideas and people become positions –
and positions are very hard to change.
• Everyone contributes and therefore buys-in to the idea.
• The situation will change over time and course is easier when everyone
was part of the original idea.
• Three parts to every conversation
LEADERSHIP MISCONCEPTION #5
• A leader mandates change
LEADERSHIP MISCONCEPTION #5
• A leader mandates change can mandate change in times of
crisis; in all other times, a leader must coax change
Why?
• CEOs are used to being direct – “tell” is the normal
behavior; Asking by “how” or “why” are more powerful and
longer lasting.
• Focus on positive reinforcement, not negative.
• Removal of stress from a situation yields better results than
the addition of stress.
LEADERSHIP MISCONCEPTION #6
• A leader needs to be tough
- they set the standard
- they need to maintain power and an air of authority
LEADERSHIP MISCONCEPTION #6
• A leader needs to demonstrate the correct use of:
- Power
- Anger
- Feedback
- Respect
Why?
• Power: Give power and authority away daily. Understand where the power is in
a meeting and respect the lack of it.
• Feedback: Asking for it opens a dialog. If you are willing to receive it, you are
teaching others how to receive it so they are more willing to take it.
• Anger: It’s counterproductive. Stops all dialog and problem solving – at the
worse possible time – when you need it. People will pass it on.
• Respect: Always give respect unconditionally – then you can expect it back.
LEADERSHIP MISCONCEPTION #7
• Great leaders are successful people
LEADERSHIP MISCONCEPTION #7
• Great leaders surround themselves with successful people
Why?
• Growth and opportunity come from below, not above.
• Don’t think of problems as personal. Great leaders always
put needs of the company, its customers and employees
first.
PRINCIPLES WE
LIVE BY
PRINCIPLES WE LIVE BY
• Have an “open kitchen” (rule of Buca
di Beppo)
• Measure outputs, coach inputs
• Deal in facts … “seek the truth”
-
Microdata not micromanagement
-
You can’t communicate enough!
• Focus on defining the problem; it
should be 95% of the effort
• First the bad news
• It’s ok to call ‘Time out’
• Set the table
• Time of warning = time of delay
• Feedback is a gift
-
Find a mentor and ask for feedback
-
Say “THANK YOU” for feedback – all feedback
-
Say what needs to be said, right time, right way
• Lead or be led
• Focus on the journey… not the
destination
• Trust & respect are key ingredients in
success
-
You have to give them first before you can
earn them
-
They simplify all interactions
SOME THOUGHTS ON EDUCATION
• It should be our #1 priority
• Leading is lonely
• Mandates fail
• Collaboration over consensus
• Investment is a requirement
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SOME THOUGHTS ON OUR ECONOMY
• Education is our #1 priority
- Perception versus reality
• What’s the goal?
• We can’t legislate growth and success
- We need to get out the way and let it happen naturally
• Invest in many small initiatives not a few large
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