How We Added Value to French Software, But We Were Not Appreciated
Judging by the responses, stories about how I didn't become a millionaire or how I failed to save the American nuclear power plant are in great demand on Habr. Therefore, I will continue publishing cases from the life of a redneck coder and give some business advice to those who are going to earn millions selling software. I demand likes, subscriptions and donations, like a real infogypsy.
This story happened after I returned from the US in 2008, where I successfully spent all my money received from the plundering of Soviet factories by a gang of hijackers led by Kakha Bendukidze. In the US, I tried to launch my startup, but did not succeed, but this is a story for mommy startuppers from the VC website. Here I will tell you what happened next, since this concerns the development and promotion of software. And I will give some free business advice, which for big money can only be obtained in Tony Robinson's courses.
In Russia, as in the rest of the world, at that time, in addition to the 2008 crisis, a less noticeable, but no less epic and touching story of the liberation of the Jews from captivity by the Pharaoh was unfolding. For those who have not read the Bible, I will remind you that Moses led his Jews, released from Egyptian captivity, for 40 years through the desert (there were no navigators or Yandex maps then, and no one could escape back). The followers spat, cried, cursed, swore, but followed Moses through the desert. The same biblical story unfolded in the field of software development, with specialists from the French development company, the one-that-must-not-be-named, which designs the Rafal combat aircraft. In the depths of this office, the CATIA 3D design system was developed.
The background is as follows. In 1981, Dassault entered into an agreement with IBM. According to this agreement, the French Jews agreed that IBM would “drive through the desert” (sell) CATIA around the world for 30 years, and take 50% of the sales for this. And Dassault Systemes would not sell its solution directly to anyone: https://isicad.ru/ru/articles.php?article_num=20173 And so for 30 years the French cried, injected themselves, cursed, swore, but continued to pay IBM 50% of the price of their software. Until finally in 2009 they paid 600 million dollars for the IBM division selling the Dassault Systemes solution. It is clear that over these years IBM has skinned Dassault not 3, not 7, but all 777.
Here it should be said that Dassault for France is not just a company name, or the name of a person and an airplane, it is much more. It is like Gagarin (the first man in space) and Gazprom (where dreams come true, before explosions on the server stream) for us, but in one word. When I first arrived in Paris, on a night flight, I got lost in an empty airport, trying to take a nice selfie. I knocked on all the doors and almost got into the city illegally, but at the last moment an Auro-French woman washing the floors ran into me. When she sternly asked why the hell I was hanging around here, I showed her invitation on a Dassault Systemes letterhead. Seeing the name Dassault, her face changed, delight bordering on admiration appeared in her eyes, and for a moment I even felt like a white planter. She threw down her electric broom and personally escorted me to the queue for passport control. There she explained to the assistant that I had come at the invitation of Dassault. The assistant, who divided people into first-class with European passports and second-class with everyone else, shared her delight at the name Dassault and assigned me to the first-class people in the French queue.
Why am I telling you this? I remembered that at this very time in 1980, Bill Gates, a boy with no education, from the street, made an agreement with IBM, according to which he was paid for developing MS DOS, and then was allowed to sell this development left and right from himself and not share with IBM. And at the same time, the same IBM was negotiating with a leading French corporation about the existing CATIA solution and squeezed 30 years of enslaving conditions out of the deal. And the dropout Bill Gates was allowed to take everything for himself, for which IBM itself paid. And, of course, Bill's mother's connections on the board of directors never helped here, Bill is just a good negotiator. Be like Bill!
Well, my story is similar to Bill's, because my mother helped me too, as it turns out later. It doesn't matter who you are, it matters who your mother is.
First business tip: Choose the right mom! (if you want to thank, the “donate” button is below)
Let's go back to Russia, where the French had just freed themselves from the Egyptian captivity of the IBM bondage and were already starting to build their own network of resellers. They called it beautifully and romantically – VAR (Value Added Reseller). Well, how to build. They bought the RAND company in the USA, which had an office in Moscow. And they sent a new director with the words “Hello, bonjour, hello! We are the stars of the continents, we tore the damned competitors to smithereens, and you rather love us. We are now your new masters, we will sell you CATIA CAD”. The employees, to put it mildly and roughly, were in fucking shock, because ten years before that they had been selling and implementing a competitive CAD (ProEngineeer), and in their anamnesis – a bunch of deals and long implementations in leading enterprises. It should be noted that selling a serious CAD system to a serious company is a difficult, long and tedious (like sex with a hangover) process, you need to negotiate with engineers, train them, make a pilot project, negotiate with managers on the terms, wait for budgeting. And then the new director, a handsome Frenchman, declares: “On a stake a bast – start over. ProEngeener, CATIA, boy, girl – what the hell difference does it make? Sold ProE, now sell CATIA.” Not all Russian sales specialists were ready for such a sharp change in sexual orientation and quit. Only engineers remained, whom the sales people did not take.
A unique situation arose where any homeless person could become an official partner of DassaultSystemes. And at that time I was just such a homeless person.
He came to conquer Moscow and settled in an abandoned building near the Kremlin. A Russian-style squat. On Bryusov Lane there was a house that had been vacated and was ready for demolition. But since one sly guy had a couple of privatized apartments there, the house could not be demolished until he was provided with similar housing in a similar area. So this guy rented out his apartments, practically legally. But other vacated apartments simply stood locked. It was unbearable to look at empty real estate in the center of Moscow. And this guy simply broke into the empty apartments, changed the locks and began renting out the already illegally seized space. The conditions were fair. 5,000 rubles a month, but at any moment the police would throw you out into the cold with your belongings. It is clear that furniture for such an apartment can only be bought from IKEA or, if you want coziness and comfort, look for furniture in the trash. After all, when the police throw people out into the cold, you won't be able to take the furniture away. There I lived in a three-room apartment with a view of the Kremlin star for 5 years, furnished with antique furniture from the dump. The center of Moscow is on the right, the house where the director of Channel One Konstantin Ernst lives, on the left is a conservatory assignment, in the next room is an art workshop of poor artists, drunken students sing operas under the window at night, and I sit and add value to the French software.
And how did my mother help here, you ask? It's simple. She gave birth to my brother, who ended up in a company where cheerful Frenchmen came. The French have KPIs, the director needs to report on the expansion of the partner network, the salespeople from the office ran away, and the homeless people at the train stations had already been dispersed by that time. That's when my brother offered me to become a partner. So, without an office, money or connections, I became a value added reseller. It was a time of romantic infatuation with everything Western, Paris then seemed like a magical city of dreams, and the French designer Kenzo was still producing classic business suits.
But the status of a partner does not bring money in itself. On the contrary, it is the French who expect me to bring them money in my beak, for a small share. In such a situation, only shuttle diplomacy will save, which allows Rothschild's daughter to marry a healthy Russian woodcutter. First, we go to Rothschild:
– Will you give your daughter to a healthy Russian woodcutter?
– Of course not.
– What if he is the chairman of the board of directors of a Swiss bank?
– And that changes things.
Then we go to a Swiss bank.
– Will you hire a healthy Russian lumberjack as the chairman of the board of directors?
– Of course not.
– What if he is Rothschild's son-in-law?
– And that changes things.
And finally we go to Rothschild's daughter
– Will you marry the chairman of the board of directors of a Swiss bank?
– No, of course not. They're all faggots there.
– What if it’s a healthy Russian woodcutter?
– And that changes things.
Second business advice: Be a healthy Russian lumberjack and marry Rothschild's daughter! (if you want to thank, the “donate” button is below)
And now I have “Dassault Systemes Value Added Reseller” on my business card.
And that changes things.
I mistakenly believed then that Added Value is when I took French software, added my product to it, SimInTech, for example, and we sell together a cooler solution. A naive native boy! In fact, as I later found out, Value Added Reseller is when you are a reseller, and any added value goes to the French, by default, that's how the agreement is drawn up. But I didn't know about it then.
And now I am invited to speak at a Rosatom conference. Dassault Russia had a really creative team at the time. That is why we made a cool video to present the joint work of the CATIA CAD design system and the SimInTech pipeline flow calculation system. Dassault office specialists went down to the basement of the office parking lot on Tverskaya, found a room with pipes and drew them in CATIA. After that, they put on white helmets, took a computer with a model of these pipes and convincingly portrayed cool engineers thoughtfully studying the model on a laptop and real NPP pipes.
And now, when I see photos of engineers in hard hats on the websites of Western engineering software vendors, for some reason I always imagine a basement in an office on Tverskaya.
For my part, I took part of the NPP model in SimInTech and conducted a comparative modeling of the two processes. Then a “chick”-montage, and at the conference we tell how, using 3D CATIA, we combined the 3D model and calculation in processes to optimize the maintenance and repair process. It was so exciting and convincing that Rosatom specialists at the conference asked me at which NPP it was filmed.
One of these fun presentations led to a real result, not quite what I expected.
At that time, Rosatom was launching mass construction of new nuclear power plants and it was categorically lacking specialists with construction experience. I mean categorically. A nuclear power plant is a large concrete structure, tightly packed with pipes. And if there were drawings and technological processes for their installation for the main pipelines, then for most pipelines everything was left to the mercy of the builders. It was written directly on the drawings: “pipelines with a diameter of less than 150 mm should be placed on site.” Or, as God put it into their souls. As a result, cases when one team laid the first system in the room, and the second cut it off, because it did not have enough space for the second system, were not an exception, but rather a rule. Such a progressive method of iGile, but with pipes, welding and concrete. Bam-bang, bam-bang and into production.
I was told a story (I don’t know how true it is) that there was a situation when they were demolishing an already constructed building because a heavy crane was needed to continue construction, but there was no place left to put it.
And then one brilliant specialist with experience in construction management saw our video and asked the following question: “Modeling temperatures is good, but is it possible to model not the processes in the pipes, but the construction process itself? So that we can pull these pipes in the first time, weld them without reworking, and also record a video instruction for workers on how to do it. So that a person without experience would understand the sequence of operations. That would be a bomb.”
To make the further story clear, perhaps I should tell a little theory. CATIA software is a mechanical engineering software with precise geometry, and for mechanical engineering processes Dassault already has a DELMIA product, where assembly-disassembly processes on a mechanical engineering conveyor with work planning already existed.
And for construction all over the world and here we use fundamentally different software – Intergraph or AVEVA, where there is no precise geometry, and the database stores only the routes and diameters of pipelines, as well as the coordinates of the places of installation of fasteners or fittings. Since, as I have already said, a nuclear power plant is a gigantic building, filled with pipelines, such an organization is more suitable for designing an object, otherwise no computer or mainframe will cope with a 3D model with precise geometry, there simply will not be enough RAM. And therefore, all suppliers of solutions for designing nuclear power plants point-blank did not consider CATIA, SolidWorks and other mechanical engineering CAD systems as competitive solutions.
That's why when we showed the work on creating a WPP (work production plan) in CATIA and DELMIA with a work schedule related to 3D geometry, it had the effect of a bomb exploding. Intergraph sellers, who had been milking Rosatom design institutes for billions in license payments with CAD design for ten years, could do nothing at that moment. They had everything under control, paid for, the process was set up, the money was not just dripping, but flowing like a river. And then some unknown dick from the mountain with mechanical engineering CATIA shows some miracles on their territory.
The construction comes to life, and possible flaws can be eliminated through modeling. The passage of large structures and the operation of equipment are checked.
They are witnessing a cross between a snake and a hedgehog. Mechanical engineering software with precise geometry is sold to designers. And they show exactly what Rosatom needs at the moment, namely, how to avoid problems during construction. I remember a funny situation when one IT specialist who worked closely with Intergraph was frantically collecting our advertising materials after the conference so that, God forbid, they would not reach the management at Rosatom. But it was all in vain, we were an unstoppable porshe with no break. A specially created team carried out a pilot project for the creation of a PPR for a year. Now he is not Dimon, watching our videos on Channel One together with the nuclear minister:
It cannot be said that we in Russia were the first to come up with the idea of using mechanical engineering software for construction. Before that, there was the American architect Frank Gehry, who loved CATIA because it allowed him to create tricky surfaces, and he also attached mechanical engineering CAD to construction tasks in his office, developing his own solution.
When Gehry started selling his own development to other bureaus, the French came running to him and began to demand that he give them all of Added Value, to which he did not agree and sold his solution himself, creating the company Gehry Technologies. https://www.digitalproject3d.com
If a customer wanted to buy, he first sent them to Dassault for CATIA, and then sold them separately the tools that turned the mechanical engineering CAD into architectural (and he even had construction planning already). And the French could do nothing about it.
By the way, his story could be a lesson to me, but what kind of fool learns from other people's mistakes when he can make his own?
Besides, I believed in perestroika, glasnost, democracy, Western values, partnership relations in business, the inviolability of signed contracts and other fairy tales that we were treated with about business in civilized countries. And so I worked calmly together with the Russian office of Dassault Systemes, especially since the result was obvious: Rosatom, which had never had CATIA, suddenly started buying it.
In the wake of the initial euphoria, I came up with an industry catalog of equipment, where all suppliers were supposed to put their data together with 3D models. The idea to collect 3D models from suppliers grew out of the need to create work production plans; this equipment had to be turned around in the NPP premises during construction. Dassault Systems had a ready-made solution for storing product catalogs, ENOVIA (a data management system purchased from the Americans). And I came up with a brilliant solution: take this product, put it in design institutes and give suppliers the opportunity to fill it. It is profitable for the supplier to have his products purchased, which means he himself will throw the necessary information into the catalog. This was a business idea that I managed to test in practice. During another business trip to Paris, I found myself on a plane with a nice lady who was a representative of the valve manufacturer Vanatome and just wanted to sell her valves to Rosatom. And I already felt like a fucking cool supplier of IT solutions, and suggested:
– We are currently developing an industry catalog for Rosatom together with the French. Let us have a couple of models in 3D format, like in a real catalog, and we will use them in a demonstration project and highlight your company in Rosatom.
She agreed, and a week later we had a ready-made prototype of the catalog with real equipment from a real supplier. The demo was so awesome that even 8 years later, in the presentation of the Unified Industry Catalog, pictures from this video were still found:
Meanwhile, we made a great demo of the construction, demonstrated the functionality of the solution, and Rostom started buying. On the wave of initial success, I managed to make a major deal with one of Rosatom's design organizations; under the VAR agreement, my share was not 50% like IBM had before, but only 35%, but that was still good money. Another 3 such deals, and I could have earned a million bucks. The dream of becoming a dollar millionaire was closer than ever.
A large corporation and a small business are two very different things.
That's where I learned that as soon as contracts become big, big companies (Corporations with a capital “C”) start to behave differently. Working with a Corporation is not like selling pies at a train station or stealing change from pockets, it requires a completely different approach.
They call me to a meeting at Dassault Systemes Russia and the handsome boss explains that I will be meeting with the big boss, a very big boss. “You just don't understand what a big man has come to us and wants to meet you! This is your boss!” Of course, at that time I was an extremely impudent asshole and thought that there were no bosses here at all. I am your boss's partner, and you are all hired office plankton and corporate mold. Moreover, purely legally it was true – I had a contract with a French company with an address in Paris and the signature of a French top. But of course, I did not say this out loud.
The boss, whose mere sight should have made me feel incredible happiness and heavenly pleasure, turned out to be the head of direct sales at Dassault Systemes. I don’t know what level he was there, I’ve never really understood these corporate hierarchies. And this Frenchman announces to me:
– We love you, we value you, and we want to continue working with you. But, you see, here's the thing. This institute is a large organization, and large organizations buy software directly without any partners. I'm used to working directly and I don't know how to work through partners. So let's sell it through you as an intermediary under a VAR agreement, but we'll pay you 15% instead of 35%.
– What about the contract, everything is described there for the first transaction 35% + other bonuses are possible?
– Well, there's an amendment in the contract on page 123, according to which we can separately set your margin for individual clients. And on page 10 it says that we have the right to prohibit you from selling our software to companies with which we work directly, and there's also protection of the territory. We can generally kick you in the ass from Rosatom and send you overboard into a body of water, but we love you so much that we can't eat, so we're ready to leave you 15%. Honestly?
The scene is straight out of the loot section of the movie “Wedding in Malinovka” and I was Smetana.
Can you imagine my condition? I have never been in such pain before.
That's why I wasn't so upset when a little later the big Corporation decided that great companies don't need small intermediaries who only get confused between such pillars as Dassault Systemes and the Corporation. Corporations can enter into direct partnership agreements. And Dassault Systemes will get more and Rosatom will pay less, which is good for everyone, except me, of course.
Indeed, not only everyone can transfer licenses from Dassault to the Corporation. In addition to my company, there are many others that are ready to transfer licenses to the customer for a much smaller percentage, and there are also direct sales, when the French themselves transfer licenses without intermediaries.
Third business advice: Don't be a passer-on, anyone can pass on, do something of your own! (if you want to thank, the “donate” button is below)
Everything happened according to the classics: after each victory, the innocent are rewarded and the innocent are punished.
My main mistake was that I was too naive, I believed in my genius and in the conscience of the French partners, who would pay what was promised to the intermediary who brought in a new large customer. In the common sense of the Corporation's effective managers, who can understand that without our brilliant solutions, French software will not work, it is for mechanical engineering, not for construction!
I thought that here it was, finally, happiness, but no, it turned out to be experience again. The French turned out to be without conscience, effective managers without brains, and I without much money.
You shouldn't think that I'm offended by the Corporation's managers, in no way. You need to understand that there's no point in an effective manager taking risks when working with a small company. In case of success, he'll get his salary, and in case of failure, he could become the scapegoat for bringing in some homeless company. In case of working with a global brand, there are no such risks at all, because if the global brand screws up, the manager won't be to blame, because he took the best global solution. He's a great guy, with a capital M, not a weirdo with the same letter.
I remember we had one typical story with a customer. Our good friend found an American in Spain who developed and implemented ENOVIA, knew it inside and out. But he no longer worked for the corporation, but was a private consultant. We brought him to Russia at our own expense, paid for the business trip and 5 days of consultation at a price of $750 per day. And he really helped us present the future catalog well.
After that, the customer offered to pay for 20 days of consultations, but not from us, but from Dassault and at a price of $ 1,500 per day. I came to the office and said take our consultant, he was a developer, knows everything “from A to Z”. To which I was told that a cool specialist would come directly from the Enovia department, he just works there right now, and not just from the street, a retired goat drummer, whom you brought. He will be a specialist with a capital S!
In the end, the customer paid, the French brought a consultant. At the meetings, he sat dumbfounded, with his whole appearance as if asking, where am I, what am I doing here? He wrote down all the questions, but did not answer. I could not stand it and during the break asked him:
– Why the hell are you nodding and blinking, why aren’t you answering questions about ENOVIA?
– I don't have a clue what you're asking me about. Two days ago I was working at Siemens, I've never seen your ENOVIA in a coffin, they hired me and immediately sent me on a business trip to your ipene.
These are the costs of working with large customers. And the customer's managers were happy because a person from Dassault came to them, and not some “shady” consultant found in a Spanish garbage dump by Russian intermediaries.
Perhaps this pathetic story sounds like I'm still mad at Dassault Systemes and blaming the French just because I lost money. But other big Western companies are not like that. Then here's a picture from another case and another big Western corporation:
Siemens sold a modeling system to an aviation company. At the same time, a simplified formula with averaging was used to calculate the temperature. This approximation is quite applicable if you have a large heat flow and the accumulation of energy due to heating of heat-exchange surfaces can be ignored. But in that particular task, this averaging noticeably affected the result.
And a rare situation has arisen in our reality, when the decision to purchase engineering software is made not only by managers with an unnatural scientific education, but also by engineers who can make their weak voice. A simple pilot model was created to demonstrate the capabilities of the software. Siemens is fully confident that the money is already in its pocket, managers put champagne in the refrigerator, and the system calculates incorrectly. Moreover, the engineers turned out to be meticulous, they found a place where Siemens screws up, created a test task from a textbook on thermal hydraulics, which has an analytical solution. In fact, they worked for the testers.
And instead of quickly correcting the calculation formula (there were probably 2-3 lines of code), a large, long and tedious corporate process began with correspondence between the support service, the pre-sales department, the quality department, the directorate of developing markets, the anti-corruption security service and other senseless office plankton that any large Corporation grows with. As a result, while real engineers fought their way through corporate growths to real software engineers in India so that they could make corrections, the train left, the airplane flew away, shaking its silver wing, and the customer chose another solution.
So working with large corporations is a separate art. But let's get back to my story. What to do when large corporations step over a small company and work directly? Read the classics!
In such a situation, what was left? To study, study and study again, as the great Lenin bequeathed, and to make our own solution. That is what we did. Everything that could be taken from us was taken from us, but the software solution itself, which linked the plan-schedule and the 3D model of the NPP, was developed by us and therefore we continued to develop and sell it. By the time even effective managers began to gradually understand that the French software does not work out of the box, as we showed in the video, but requires a lot of revision with a file and a soldering iron, we already had the LCMS solution, in which we threw out the French 3D visualization and replaced it with the domestic C3D core, having developed our own 3D module, taking into account all the features of working with large construction assemblies.
Well, after all our beloved French left the market in English, we stayed.
And now we are like Frank Gehry, we also have a technological development for construction, and we are helping to build nuclear power plants.
Business tip number four: Ambition must exceed capabilities (if you want to thank, the “donate” button is below)
