Corel Corp. Has a New Custodian
Acquisition by Vector offers new
lease on life...but same challenges
It proceeded with little fanfare and not much attention. One group of dissidents garnered attention with a loud website and even louder allegations, but in the end, the vote was a foregone conclusion: Corel shareholders voted overwhelmingly to approve the sale of all common stock and the delivery of controlling interest to an eight-person company in San Francisco, Vector Capital Holdings.
Many of the leaders and the more vested members of the user community got an opportunity to learn a bit about Vector at CorelWORLD ’03, where Chris Nicholson encountered an audience that wasn’t really sure whether to be receptive or skeptical. His candor disarmed the group and many left with a sense of optimism, or at least hope, for the future.
On August 26, one day after the acquisition was approved by the courts, I visited Vector’s headquarters and met with Chris and with Amish Mehta, the principal at Vector who is working directly with Corel’s executives. I left that meeting with a blend of optimism and apprehension. On more times than I can remember, I’ve been on the receiving end of the Corel pep talk that begins with “We’re making some important improvements in the way that we work with ________ [fill in the blank with some critical aspect of the community—existing customers, prospective users, technology partners, independent solution providers].” Invariably, there were no teeth behind the pep talk; it was only natural that I would leave the building on August 26 wondering whether this time it would be any different.
The eternal optimist in me wants to believe that it will. After all, I wasn’t talking to Corel; I was talking to a group that is trying to save Corel. They are a group that knows full well the trouble that Corel got itself into. They watched from the outside, and in many ways, that allowed the conversation to proceed with more candor than usual.
I spoke bluntly about the three areas in which I think Corel has persistently failed in the last five years:
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How the company has positioned CorelDRAW and whom it sees as its target audience.
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The degree to which Corel has lost sight of its own user base—its needs, its desires, and its hope to stay connected to the company on some personal level.
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And how it has alienated many who have tried to make a living in the Corel orbit by writing books, offering training products, or hosting events like CorelWORLD.
Amish took lots of notes, nodded many times, and indulged in what sounded like his favorite slogan of “fair enough.” But after years of “We assure you that _____ will happen,” fair enough was not an unwelcome response. His assurance to me was that he understood the mistakes that Corel has made over the years and that he would take these issues up directly with Corel’s marketing team.
And therein lies the apprehension. Vector appears willing to allow the existing marketing team to work through Corel’s current problems and proposed solutions. Those people will be free of shareholder pressure and will have more workable budgets, but is that enough? The marketing team today includes several of the people who got them into trouble in the first place. Even if it was not their faults, sometimes you just need new blood and fresh perspective.
Albert Einstein said it best: “Problems,” he said, “cannot be solved at the same level of consciousness that created them.” Vector has stated its unwillingness to change management at Corel, and that means that there will likely be no change in consciousness and culture at Corel. Now if I were Vector co-founder Alex Slusky and I were intending to clean house at Corel, I wouldn’t exactly be going public with that, so we on the outside do not really know the score there. But this much is certain: Corel needs more than a change in direction and in fortune. It needs a change in attitude, in culture, in confidence—as Einstein said, a change in consciousness. Perhaps that can happen with the same people at the helm, and as the replacement for the Board of Directors, Vector had better make sure it does.
Specifically...
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Corel needs to open new markets. And there is no better market to pursue than the business user and the scores of Microsoft Office users who need a good graphics app and either don’t know it, or don’t know where to turn for it. (Read our May of 2003 rant, The Boat that Corel is Missing.)
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Loyal customers must feel appreciated. Today, there is practically no dialog between the two camps—few healthy user groups, precious little access outside of big faceless trade shows, and almost no dialog on public forums and newsgroups. Corel should hire an evangelist whose job it is to spend all day reading and composing newsgroup posts and then report to someone at the directorial level. And whatever it costs, Corel must resuscitate user groups and send representatives to them.
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Friends must be recognized as friends. Corel has lost its appreciation for a vibrant third-party community of partners. A person who makes a living training others on Corel products provides invaluable service to the company in terms of technical support and customer service. In the last few years, Corel has treated anyone who makes money off of Corel products as competition. That is deplorably short-sighted and directly responsible for many of the company’s current problems.
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Give CorelDRAW a better budget. The development team for CorelDRAW understands what the product needs and what its users want (it is one of the few departments at Corel that makes a point of hearing user concerns). But on too many occasions, there was understanding, there was desire...but there was no budget. It’s easy to complain about budgets when you don’t have to make them, I know, and I don’t pretend to know where that money should come from. I just know that it has to come from somewhere.
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Decide what to do with Ventura Publisher. The venerable publishing powerhouse remains the most incredible software program that nobody knows about. Corel has never known what to do with Ventura, how to position it, or how to market it. Amish admits that the folks at Vector don’t know either; they have stated that they must first look at the big products and work from there. I don’t fault them for this, but they must decide soon that the product is either worth fighting for or should be sold to an interest that is willing to fight for it. Letting it wither on the vine is not an option and selling it off to kill it off would be unconscionable.
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Vector Capital promises to infuse Corel with money, direction, and a new spirit. Those are very good things, but they are not enough. Vector needs to make sure that mistakes are not repeated and that there is a transfusion at Corel of good blood for bad blood. Whether that means wholesale changes of personnel or just of attitude and culture, that is for Vector to decide. But nothing short of that is going to get the ship turned around, and I hope that Vector appreciates that.