Tandem founder Treybig holds forth on e-business

Tantau Software, formerly the Tektonic Software Business Unit within the Tandem Division of Compaq, has raised $11 million of venture capital through Austin Ventures, and Techno Venture Management of Germany. Jimmy Treybig, a founder of Tandem and CEO until he retired in 1996, is a partner of Austin Ventures and the chairman of Tantau. Compaq retains 8 per cent of Tantau, 45 per cent belongs to venture capitalists, and the remainder to employees. Perhaps not surprisingly, Treybig does not believe that most Internet companies can be judged by traditional criteria. He points out (very much from a US perspective) that the e-business revolution is changing the nature of retailing. This makes amazon.com a sub-$100/item retailer, for example, rather than a bookseller. He attributes the success of e-business to the possibility of reaching a billion customers with a one-to-one relationship, at half the conventional cost and a fraction of traditional start-up costs. The business model is now different, and it hasn't taken venture capitalists long to come to terms with the market need and opportunity. People with e-business vision are more likely to get backed than those with a technical dream. It's a case of spending money to win market share, and not to get short-term profits. Treybig noted that there have been three VC start-ups in the last few weeks in Silicon Valley, with each having more than $1 billion in their pots. Treybig, who has 30 years VC experience, doesn't think that new start-ups can be valued in the same way as used to be the case. Tantau has been set up to help with the data integrity problem that Treybig reckons is endemic in most e-business. He claims that most new entrants to e-business hardly know what data integrity is, noting that data can become irrecoverable. Expansion has generally been too quick to allow systems to be properly architected, and the consequences of systems failure can cost many millions, or drive a company out of business: eBay ("no idea of availability, data integrity, or scalability," Treybig says) and Schwab come to mind. A problem with e-business is that it requires designers to work five times faster, because of the time compression that characterises the sector. It is very hard or impossible to test a system, since scalability problems become apparent suddenly. Tantau's methodologies include modelling rather than testing. Tantau is not tied to Tandem fault tolerance kit, Compaq's products, or NT ("there's a problem with NT - it fails a lot," notes Treybig, an advocate of open systems). Tantau has the software it obtained from Tandem/Compaq initially, which Treybig values at $25 to $30 million, including some data mining products, and - not least - the people. There are 36 developers in Germany and Scotland. Tandem veteran Harald Sammer leads the technical team, with Peter Robinson heading the European office from St Albans. Not everything that Treybig touches has worked out: he has a hobby farm near Austin with five cows that were bought for tax reasons, rather than with a view to his becoming a farmer, but one of the cows was pregnant when he bought it. Whether this mounts to a cash cow, and whether Tantau has the right formula to grow as fast as the companies it helps is an open question, but there is likely to be a place for smaller, specialised companies able to offer expertise in avoiding the pitfalls that are being found as a result of the time compression in web site development, and the minimal attention to scalability that is often the case with Web start-ups. ®