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FINANCIAL TIMES WEDNESDAY JULY 14 2010 Business Life Mapmaker follows his own path

Entrepreneurship Jack Dangermond, the head of geographical data company ESRI, has navigated 40 years of change in the tech sector, writes Maija Palmer

n a technology sector known for young entrepreneurs who splash their cash on fast cars and yachts, Jack IDangermond is a bit of an oddity. He still drives a beat-up old station wagon, although he has a personal fortune estimated at $2bn in 2009 and he still runs the privately held company he set up four decades ago. And at 65, he is still chief executive of California-based ESRI (Environmental Systems Research Institute), the world’s fifth-largest privately owned technology company. Its geographic information system software enables Location, location, location: Jack Dangermond started ESRI to help organisations analyse complex analysis of complex geographical data geographical data to to make decisions relating to a location Ed Carreon for organisations needing to make big, complicated decisions relating to a location. BP, for instance, is using it company, has an annual turnover of than expensive hangover remedies. It is to track the spread of oil after the more than $1.2bn (€953m, £795m) and even used by diamond prospectors to Gulf of Mexico disaster. more than 300,000 customers, including help analyse anthills, an indicator of “My wife is always making fun of most of the world’s governments. gemstone deposits. me and saying I should buy something Customers for ESRI software “Something like 80 per cent of business better but I just don’t like [the include organisations trying to rebuild decisions have a location element. idea of spending lots of money on infrastructure in Haiti, the US military, In fact, it’s probably higher than that,” myself]. It seems pretentious and unreal the UK Ordnance Survey and the UK’s says Mr Dangermond. “This is IT that to me,” Mr Dangermond says, while Metropolitan Police, which uses it to matters, that has the potential to help biting into a plain bacon sandwich in the world. We tell stories with maps Borough Market, the trendy farmer’s about global warming, biodiversity, we market in London. He is in the UK to ‘We tell stories with can design more liveable cities, track receive an award from the Royal the spread of epidemics. That makes a Geographical Society for promoting maps about global difference.” geographical science. He does have an warming, we can design Recently, popular understanding of indulgence, however – trees. A keen con- the value of maps has been boosted by servationist, he buys thousands of acres more liveable cities’ new consumer-focused, internet-based of “junk” land in southern California mapping services such as Google in order to reforest it. Earth or Microsoft’s Bing maps. These The son of Dutch immigrants to the map crime statistics in London. Big have spawned a huge number of tools, US, Mr Dangermond trained as a land- retailers such as Walgreen’s, the US from celebrity-spotting guides to traffic scape artist and city planner before a drugstore chain, and coffee chain data and where to buy the cheapest stint as a researcher at Harvard’s Starbucks use the software to decide petrol. “We don’t really compete computer graphics lab led him to where they should locate stores and with them but it has done our business develop the mapping tools that what items are most likely to appeal good because it has helped people became the basis of his business. among various local demographics – such know more about geospatial analysis,” ESRI, which Mr Dangermond runs as where people are more likely to buy says Mr Dangermond. with his wife Laura, who co-owns the budget nappies and baby formula rather However, ESRI’s software is much well. We are getting several thousand the memory. “I am not that good a pops a day,” says Mr Dangermond. manager for me to be comfortable borrow- The move online, aimed at reaching ing someone else’s money,” he a larger audience and making the adds. “It took us years to do it, building technology easier to access, is only up incrementally, but we built a the latest in 40 years of technology financially strong company.” shifts weathered by the company. Mr Nor has he ever been tempted to Dangermond started out in the days sell or list the company on the stock of mainframe computers, and ESRI’s exchange, in spite of repeated approaches business model was to sell just a few by investment bankers. “You have to licences. Mr Dangermond then saw decide who you are going to serve – the order of magnitude increase dramati- stockholders or your customers,” he cally and repeatedly as minicomputers, says, adding: “I could have stayed on at Unix workstations and personal comput- university, but I was passionate about ers emerged. The move to put getting the technology out to customers.” information on the internet will increase If those values seem a little homespun user numbers by another such jump, he and cautious, they may also be believes. coming back into fashion. Initial public offerings are increasingly rare in ew software companies survive the tech sector. There were seven such change. One of ESRI’s technology IPOs in Europe in the first Charted waters: BP’s oil spill mapped strengths may be that it spends three months of 2010, compared with against marine life and other factors Fmore than 20 per cent of revenues 33 in the same period in 2006. Funding on research and development, about has also become more difficult. US more complex and offers customers a double what is typically spent by tech venture capital funds raised just deeper level of analysis than Google’s companies. $3.6bn in the first quarter of this year, or Microsoft’s. It allows multiple layers Also, unlike the start-ups sustained the slowest opening quarter of a year of data to be overlaid on one map. by multimillion-dollar venture capital since 1993. In the case of the BP oil spill, it can funding rounds, Mr Dangermond has For technology entrepreneurs hoping help track the spread of the oil only borrowed once: a $5,000 loan to build a business that will last, against information about conservation from his mother near the outset, the path mapped out by Mr Dangermond areas, marine life data, currents, which was tricky enough. “It was difficult may be an attractive alternative weather and other factors. . . . She waited a day before after all. “Consumer mapping is very cool, deciding to give it to us,” he says, but [Google Earth and the Bing maps] rubbing his eyes under his glasses at are really just about visualisation . . . They are not set up to be data manage- ment systems or for real spatial On the younger generation analysis,” he says. After 40 years in business, Jack who do want to do these things but While consumer mapping services Dangermond has some words of perhaps the role models are not there.” benefit ESRI by raising awareness caution for the next generation of Beware venture capital funding. generally, attracting a new audience technology entrepreneurs. “Many of them are already talking about has also forced some changes such as their next funding round before they rolling out a version with simplified Look beyond money. controls. The company is also putting “They bother me. They are so focused have established the product. Forget it. some of its tools online so that on starting a company and getting rich There is a whole lifestyle built around smaller companies and consumers can quick. They are not interested in their venture capital funding but having a lot use them. This includes creating an lives mattering. It’s all about starting a of money can get you into a lot of internet service, Business Analyst company, getting out and getting the trouble. You lose discipline.” Online, where individual queries can sports car.” Few have built lasting companies. be run for as little as $25. A licence for Microsoft and Google, for example, meet the software used by big clients can Customers are king. “They don’t seem to be interested in his approval. “But how many successes cost about $40,000. “Large retailers have always been able to get a geographic serving customers or building up a are there? Not many.” advantage over smaller ones, but the neat company. There must be people smaller ones can access some of that as