BUSINESSWEEK ONLINE : MAY 29, 2000 ISSUE
COVER STORY SERENA Software: Keeping All Systems Go SERENA Software Inc., Burlingame, Calif. PRODUCT Project-management software SALES $75.4 million WHAT'S HOT The coding isn't sexy, but it keeps track of complex tweaks and patches in corporate computer systems Douglas D. Troxel, the founder of SERENA Software Inc. (SRNA), isn't the kind of man who kids himself. Raised on a 136-acre Iowa farm, he loves his independence, knows what he's good at, and is aware of what he's not good at. So when he decided three years ago that it was time to turn his tiny consulting firm into a software company, he figured he had better bring in the hired suits. ''I still write software,'' says Troxel. ''That's what I'm good at. There are other people who are much better at other things.'' It's a cogent insight. Over the past three years, SERENA Software, based in Burlingame, Calif., has been among the best-performing small companies in America--even if it isn't one of the most glamorous. SERENA, No. 6 on the Hot Growth list, makes software that helps companies manage huge information-technology projects, such as rebuilding a company's financial software. It doesn't matter if the software is on a mainframe or a powerful PC server. SERENA can help keep track of the tweaks and patches that can make corporate software so hard to fix. WORLDS APART. SERENA has grown fast, with little Silicon Valley hype. Revenues have grown at an annual average 62% over the past three years. Net income in that time grew an annual average 144%. The company recorded sales of $75.4 million for the most recent 12 months and net income of $14.6 million. That sets SERENA worlds apart from a lot of high-tech startups that put sales growth ahead of profits. Wall Street caught on to the company earlier this year after its most recent financials came out. SERENA, which went public in February, 1999, at 13, saw its stock price double during a three-week period through early March, to 40. The stock has since fallen back to about 25. ''It's kind of a throwback to another time,'' says Chris Galvin, an analyst at Chase H&Q in San Francisco. ''I don't think people know what to make of a company like this anymore.'' Much of the credit for SERENA's sizzling performance goes to Richard A. Doerr, no relation to the famous venture capitalist. Troxel, who keeps the titles chairman and chief technology officer, recruited Doerr three years ago to run his company. It was a hard sell. ''I had five job offers,'' Doerr says, ''and SERENA was No. 5 on my list.'' But he took a look at the company and saw potential. Doerr took Troxel's technology and built a marketing program around it. He also helped steer the company beyond mainframe software and into new areas like PC-based computing and the Internet. Today, SERENA's list of blue-chip customers boasts such names as IBM, Bank of America, and General Electric. Troxel, 55, started the company 20 years ago because big customers would not contract with an independent mainframe consultant. SERENA was named after his children, Sergie and Athena. But Troxel didn't hire his first employee until 1985. He has kept the company under close watch, and that impresses customers. ''When the founder or the owner knows the business, understands what runs it and what it needs, it shows,'' says Nasser Mortazazi, senior vice-president at Beta Systems Inc., a customer in Brookfield. Wis. Still, SERENA faces plenty of challenges. It is best known as a mainframe-software company. If it wants to grow, it must move away from that. The biggest hurdle, though, will be the retirement of the 57-year-old Doerr. He announced two weeks ago that he was stepping down to spend more time on charity projects. Into that void steps Mark Woodward, who came to SERENA 18 months ago after 20 years at various software companies, including McAfee & Associates Inc. and Computer Associates International Inc. It will be Woodward's job to move SERENA into new markets while keeping up the culture that made it soar. By JIM KERSTETTER _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Hot Growth Companies TABLE: The Revenge of Brick and Mortar WWF: One Rock-'Em, Sock-'Em Company Direct Focus: Flexing Its Marketing Muscle Meade Instruments: Back from a Black Hole Diamond Technology: Attack of the Killer Apps Children's Place: Hey, Good-Looking Albany Molecular Research: All R&D, All the Time SERENA Software: Keeping All Systems Go U.S. Concrete: Breaking the Cement Mold What Happened to the Class of '98? TABLE: The 1998 Winners...and the Losers TABLE: Hot Growth Companies, 2000 (.pdf) ONLINE ORIGINAL: Somera: Top-Notch Profits from Old Tech Gear INTERACT E-Mail to Business Week Online

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