Jack Dangermond calls his company Environmental Systems Research Institute (ESRI) America's best kept software secret. He says this because even though his company is the world's largest mapping software maker, it is not a household name like Microsoft or Google. The company was founded in California in 1969, way before any of the Microsofts or Googles of the world came into existence. Without borrowing a single penny from any bank or venture capitalist, Dangermond turned a US$1,100 investment into the world's largest mapping software company worth US$1.4 billion. Today, ESRI has hundreds of thousands of customers all over the world, including federal agencies, health departments, schools, and land management agencies.
When I met Dangermond in Singapore for an interview sometime ago, he came across as someone who could engage you in a very short time. I was primarily fascinated by his background and his entrepreneurial abilities. The son of a gardener, his parents owned a plants nursery. At the age of sixteen, he started running a crew in the nursery, and from there he went on to found the world's largest mapping software company, ESRI, after studying environmental science at Cal State Polytechnic, urban planning at U. of Minnesota, and landscape architecture at Harvard. How did that happen?
"I grew up in a family that had a nursery," Dangermond narrated his family history matter-of-factly. "We grew plants. My parents were immigrants to the U.S. and we all grew up planting things and selling things in this nursery. They worked hard to put both myself and my brothers through college. And all of us went into the field of landscape architecture, of which I was the third in a row. During the 60s, computers were just starting to emerge and a field that I became interested in was not landscaping, but landscape - meaning, landscape as a noun, like in geography. To be able to do landscape analysis and landscape planning, we use maps extensively. At that time, I went to a laboratory because I was interested in it, at Harvard. It was an experimental lab for automating geography and automating cartography and doing spatial analysis. And I became interested in that."
While he was educated as a designer, he said he got attracted to quantitative methods and science-geography as a foundation for doing design. "After I graduated, I decided to go back to California (Redlands) and start this organization," he said, referring to founding of ESRI, "first by applying some of those computer mapping tools to problem solving in the environmental and land use planning, and later on in business decision making. And for ten years, did a kind of consulting. Practice using these software tools that I had worked on at Harvard but then during those periods, we evolved the tools to get better and better. After about ten years, a lot of my customers who are planning organizations, businesses, or agencies, were interested in getting their hands on the software I was using. And that time the software was not productized. It was basically a homemade software that we had used for professional practice. We made a strategic decision to invest in taking all of our resources and building it."
When this happened around 1969, it was still early days for software product companies. Then, Oracle didn't exist, Microsoft didn't exist, SAS didn't exist, Autocad didn't exist. "So we were inventing new grounds trying to productize the best practices of what we were doing in the consulting business," he said. "It became by nature, a practical software, for application work. It also was designed as a first principles platform for digital cartography, or digital geography. As a result, many universities began to purchase it for use and teaching geography using quantitative methods. And it also was acquired by cities and states and utilities, natural resource organizations to do geographic analysis to be able to make better decisions. It wasn't an abstract technology; it was very practical in terms of modeling geographic. Phenomena, processes of various types, both physical and cultural, and then using that geographic science as a way to both visualize process but also then do design and planning on top of it. That started on many computers, then went to workstations and PCs, then client servers. And over those 30 years of evolution of the platform technology, we went from a few dozen customers to now quarter million - actually about 350,000 organizations that use the tools around the world."
A best-kept software secret
ESRI is still not a public listed company which is a credit to its founder. The downside is that despite the specialized work that it does, it is still not widely known in this part of the world. "It's kind of a secret company, nobody knows about it," Dangermond says in a lighter vein. "You can say it's a best-kept software secret. So, we are US$1.4 billion software company now, but almost no one knows about it. Our software was designed, and supports what you might call mission critical organizations or mission critical functions of organisations."
"Most people know us as a GIS (geographic information systems) software provider, but we've recently entered into a different stage of growth and this is very rapidly growing in our market" he said. "This location platform brings very simple mapping of enterprise data to people beyond the GIS department, beyond the planning department, beyond the application business domain. Our customers are suddenly saying that they would like to have a location platform for their organization where everybody can make maps of their spreadsheets or their tabular data, and they want to do it themselves. They want help-yourself mapping and help-yourself integration of maps into business intelligence platforms like SAP or business objects or even Office. That's kind of an evolution of where we've come from."
I was wondering how Dangermond took his company from a US$1,100 to US$1.4 billion in revenues. How did he reach out to his customers without a marketing budget in the initial days.
"It's an interesting question because we did it one by one," he said. "We talked to each customer one by one. It wasn't a sort of a mass marketing approach, and people who are doing real business work with IT are much more attracted to people who are genuinely working with them to build an information system for them in their particular work. In the beginning, it was one by one in each of the different vertical markets - one city at a time, several cities at a time. And then we would make presentations at professional conferences. That picked up word of mouth and by relatively minor investments in communications, people learned about this platform. It's not like consumer technology. You don't have to advertise when you can double the productivity or reduce cost by 80% or really save a lot of value for an organization. People hear about it, and they do it through unprofessional networks and professional associations."
Defying the rules
Dangermond is cautious about going public and getting a lot of publicity for his product for a very genuine reason. "There's a huge amount of publicity that happens when you go public, and everybody gets bought in and that's part of the reason," he said. "It's not the promotion; it's just the excitement of owning a piece of stock of a company that is going up, as opposed to a technology which really delivers value. So we've chosen to never go that route because we are really not interested in monetizing our work. We are interested in doing our work, and staying focused on our customers rather than trying to be an interesting or exciting company because of the public market."
Similarly, despite being based in California, Dangermond was never interested in going to the Silicon Valley or getting some much needed venture capital invested in his company.
"Well, building software requires real work," he said. "It's not improved because you live in a particular location or because you have the excitement of being a public company. Good and solid engineering really requires people and a place where you can do good work. We like Redlands because it is slow, our employees can live there for about half or one-third the cost of living in the Silicon Valley. It's a beautiful place, it's got really good schools so they can concentrate on their work and their families, rather than being in the mainstream of people who want to make money off the back of good engineering. That's been our approach, but I'm not against the other approach. There are a lot of start-ups that have made a lot of money, made a lot of people happy, but our interest is not that. Our interest is not in the monetization part or the financial market part; it's really on building really fantastic science-based technology that people can improve the world with."
The Singapore connection
ESRI has been involved with the government of Singapore for a few years now. The company has rolled out software for users such as Singapore Land Authority (SLA), Urban Redevelopment Authority (URA), and Ministry of Health (MOH) - government agencies that are focused on the urban management of the plants, the zoning, and the city infrastructure.
"They've used our technology as a platform for managing assets, for planning for the future, for visualizing and understanding how the city is working," he said. "There are also several universities here that use it as a platform for teaching urban planning and GIS and natural resource and environmental management. The utility company here, Singapore Power, uses it to manage all of their wire assets and distribution assets, which helps them make better decisions about how they manage their organization. These are big organizations, big customers, but my fondest one is the Singapore Botanical Gardens-the park organization where they manage plants and trees and all of its facilities, nurturing the biosphere here using GIS as a foundation."
In July this year, the Urban Redevelopment Authority of Singapore and ESRI announced that they were working jointly on the enhancement of an advanced urban planning 3D tool, Esri CityEngine. The tool transforms 2D town planning data into interactive 3D city models and it involves customization of the Esri CityEngine platform to Singapore's urban context.
Outside Singapore, ESRI has about 40,000 organizations that they support in China, Japan, Taiwan, Philippines, Indonesia, Malaysia, Bangladesh, Pakistan, India, and Afghanistan, in Asia. "I guess from a density perspective, (we are) more in North America and Western Europe, but we are also distributed pretty evenly around the world in the other countries as well. We have thousands of systems in Africa," he said.
For his services, Dangermond has been awarded the United Nation's highest environmental accolade - the 2013 Champions of the Earth Award, recognizing him as an environmental scientist and entrepreneur who revolutionised the use of geospatial technology for conservation.