The Accidental Entrepreneur: David Skok of Matrix Partners Talks Marketing Lessons, VMware Killers, and VC Missteps

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1983. Skok Systems was selling its CAD software to be used by architects, but the sales cycle was long and arduous, about nine months. Skok came up with an idea to speed that up. His team organized a huge event for 650 architects in Sun City, a South African resort, complete with lavish décor, a fancy banquet dinner, and a comedian (who was very funny, thankfully). People had a great time, and the end result was $4 million in sales in one day—more than in the entire previous year.

“That was a very formative event for me in terms of shaping what I then started to call ‘building a sales and marketing machine,’” he says. “The whole concept of trying to analyze what’s going on in your customer’s head and flipping the whole way of thinking about selling on its head and saying, ‘It’s the customer-centric viewpoint that matters here.’ Rather than the way everybody designs their sales cycles, which is from the internal view of what they want to have happen.”

So, Act I ends with Skok Systems hurtling towards $36 million in annual revenue, and Skok himself flying out to Silicon Valley to raise a venture round and go big…

Act II: The (PC) Empire Strikes Back

It is a dark time for Boston entrepreneurs, of which Skok has now joined the ranks. For one thing, the weather sucks—it’s more like England than South Africa (but with colder winters). For another, Skok Systems has taken about $16 million in venture money led by Greylock Partners—hence the move to Boston—but is now struggling mightily against the tide in computing (as would befall many a Boston-area company).

“What really happened was the PC came out, and we were based on workstations,” Skok says. “That altered the whole business model.” He calls it “my first major failure” and “a tremendous loss.” Skok left the company in 1985, and the VCs eventually would sell it for about $10 million.

Through the ‘80s and ‘90s, Skok would have customer-centric success with other companies—International Software, Watermark, SilverStream—but perhaps more instructive are the difficulties he faced in those days. (This is the middle part of a three-act classic, after all. And no, I’m not including any Matrix analogies, because those sequels should never have been made.)

Watermark, a document imaging startup, emerged from Skok’s struggles in trying to turn around a hardware company called Xionics, in which he invested in 1990. What he didn’t know, until he was in too deep, was that the company owed a million pounds to a creditor. “We’ve got a crisis on our hands, and it’s a disaster for me,” he recalls. “Instead of spending any creative energy on how to improve the business, I’m sitting there dealing with creditors every day. It was one of the worst periods of my whole life, where my stomach lining disappeared.”

Xionics slowly worked its way out of debt, and Skok (who decided he’d had enough of the hardware business) started up Watermark Software within the company; it later split off from Xionics. He also learned an important lesson about personal motivation. He had gotten into Xionics simply because he wanted to make money, not because he was deeply passionate about it.

“That was a disastrous motivation,” he says. “The moment you start focusing on … Next Page »

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