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    Shannon Henry's The Download Live
    Discussion With webMethods CEO Phillip Merrick

    Thursday, September 21, 1999 at 1 p.m.

    Shannon Henry
    Shannon Henry (TWP)
    Welcome to The Download Live. I'm your host, Shannon Henry. Today my guest is Phillip Merrick, chief executive of webMethods in Fairfax. A native of Australia, Merrick founded webMethods here in the Washington area in 1996.

    It sounds really complicated and technical, but Merrick says he has a better and simple way to help businesses buy and sell from each other online. WebMethods uses a technology called XML, which some people say is the Next Big Thing for the web after HTML. Microsoft, for one, is working on an XML offering, with help from webMethods. And tech companies like 3Com, Compaq and Dell are webMethods customers. Michael Dell himself is a personal investor in the company.

    So let's talk to Phillip about XML, start-ups and how he attracted Mayfield, a Silicon Valley venture capital firm, to invest in his Fairfax company. And how you get the richest person under 40 (Dell is worth $21.49 billion, according to Fortune magazine) to notice-and invest in-your company.

    Shannon Henry: Welcome Phillip! Can you start off by giving us a brief description of XML? And for those big-picture thinkers, how will it change the way business is done?

    Phillip Merrick: Thanks Shannon!

    XML is simply a Web-based language that allows applications, systems and companies to communicate across the Net. All kinds of business documents
    can be represented in XML. Because XML makes this kind of communication easy, it will definitely have an impact on business-to-business e-commerce.

    Chicago, IL: The next wave in the Internet growth is going to be-or already is- the B2B E-Commerce. How does Webmethods fit into the B2B strategy of a Fortune 50 company? Like partnering with a Ariba or CommerceOne?

    Phillip Merrick: webMethods provides the B2B software infrastructure for large companies to communicate directly with their customers and suppliers, in addition to allowing them to colloborate through B2B marketplaces like Ariba Network, and Clarus SupplierUniverse. In fact, webMethods is the technology behind many of these B2B portals.

    Washington, DC: How do you get several disparate companies to all agree on the XML "format", and what happens when one company does business with several others that want to use slightly different XML? Or does it just work that the early adopters set the standard?

    Phillip Merrick: Often it is the early adopters that set the standard.
    We have already seen that for instance with JP Morgan in financial services with FPML, and also with Dun and Bradstreet for credit information. However, products like ours make it possible to map between different XML document types. Dell for instance is able to support multiple XML types like Ariba CXML and CBL.

    Arlington, VA: Hi Phillip! Fellow transplanted Aussie and Northern Virginian Neale Faunt here. Given the growing acceptance of XML by such blue chip companies as Compaq and Dell, do you see a gradual erosion of support for HTML?

    Phillip Merrick: XML will probably not fully replace HTML, although the next version of HTML will actually be based on XML. HTML is about presentation of data, XML is about describing the data itself. So they will coexist.

    Chicago, IL: Are you hiring ?

    Phillip Merrick: You bet! email or check out the
    jobs section of the website at!

    Arlington, VA : I am a graduate student in Information Technology, and I agreee that XML will be the Internet language of the future. My question is, where does one get formal training in the language? Or do companies like yourself provide the training?

    Phillip Merrick: I'm not aware of any formal courses in XML at colleges etc. just yet. However, I know that companies like XML Solutions in DC, and others like, do provide XML training for companies. I'd personally recommend following mailing lists like "XMLDEV" and cchecking out websites like and Robin Cover's XML page.

    Shannon Henry: Can you tell us how web inventor Tim Berners-Lee helped inspire your work? Have you talked with him since?

    Phillip Merrick: One of our co-founders, Charles Allen, literally bumped into him at a conference very early in the life of our company. He pointed us to the XML standards effort, and at that time probably no more than 40 or 50 people in the world knew about XML. At that point we decided to orient much of what we were doing in B2B around XML -- this was in early 97. Since then we have been very active in the W3C, which Tim B-L runs

    McLean, VA: What is the greatest challange you face in the day to day business of a start-up?

    Phillip Merrick: Ross Garber, founder of Vignette, likes to say that when you are growing at 10 or 20 people a week it's a challenge just to keep the photocopier running! Well, our photocopier is still running but bringing people into the company and making them productive quickly and a part of the webMethods family is definitely a challenge.

    McLean, VA: Greetings. What is you vision after B2B? Specifically, do you see a link with community based portals -companies like and B2B? If so, what is it?

    Phillip Merrick: If you look at portals like VerticalNet, and so on you will see that they have a strong community flavor -- communities built around specific vertical industries. We are working with these companies on the transaction and integration components of their portal offerings -- for instance, we provided the technology for SAP's marketplace

    Albuquerque, NM: XML seems to be aimed mainly at commercial, business-to-business transactions. How do you see XML affecting the way in which non-profit organizations and government use the Web?

    Phillip Merrick: I'm not sure I can speak with much authority about non-profits, but like with the private sector, government can benefit from XML in applications such as procurement. The GSA has been looking at XML-based techologies for procurement for some time and has some initiatives underway

    Shannon Henry: What did you learn while hunting for venture capital? It's traditionally been difficult to get Silicon Valley funds to invest in Washington area companies, so how did you atract Mayfield? Do you see more Valley money coming here?

    Phillip Merrick: Timing is everything! Initially we found it very difficult to attract VC -- but once the word got out about both XML and B2B we started getting a lot of VC attention. The Silicon Valley firms are starting to recognize that Northern VA is a hotbed of activity, with a lot of quality ideas and entrepreneurs. We were fortunate enough to have a future Mayfield partner as one of our angel investors -- that definitely helped. We are kind of proud to have introduced Mayfield to this area-- they have now helped fund 4 area companies, including Riverbed, varsitybooks and motley fool

    Silver Spring, MD: How is WebMethods distinguishing itself vis a vis other XML developers? Do you even need bother considering the amount of new business that seems to be descending on your segment of the industry?

    Phillip Merrick: We started out as "an XML Developer", but we have broadened our offering so that we can now offer large companies like Dell end-to-end B2B solutions for them and their customers or suppliers. So we are not really competing as an XML provider.

    Frederick, MD: You describe your product as software infrastructure. What is the difference between that and the broad range of so called "MiddleWare" products? How do the pieces fit together?

    Phillip Merrick: Historically "middleware" has described the technologies for connecting applications inside the enterprise. What we provide -- described by analysts as "Business Community Integration" in case you were wondering ;-) -- is more comprehensive in that we have to deal not only with application integration, but trading partner management, external B2B protocols like RosettaNet and OBI, plus the secruity requirements. things like PKI encryption and digital certificates. So it's more comprehensive I think -- and definitely externally focused rather than inside the enterprise.

    Falls Church, VA: where does data mining and business intelligence fit into your business model?

    Phillip Merrick: We tend to be more focused on transactions, using that term in the broadest sense (ie. not just $$ transactions). We work with partners on this side -- for instance we are talking with a company in Boston called InfoRay that is working on how XML fits in the data warehousing datamining space. And locally I think Microstrategy is looking at this space too.

    Tysons Corner, VA: Phil, specifically what skillsets is wM looking for in new hires. Are you willing to crosstrain IT professionals with non-internet experience -i.e., dba's, systems analysts, data architects, etc.- who have a strong desire to move into the e-commerce arena?

    Phillip Merrick: The primary things we look for are passion, integrity and intellectual bandwidth ;-) So if smart and motivated people who fit our culture want to join us, and the cross-training required is within our reach, sure we are open to that. Actually there just aren't that many people out there with all of the skillsets we require: XML, Java, security, ERP systems -- rarely do we find people with all those things!

    Annapolis, MD: Phil, Are you the least bit nervous about slipping into bed with Microsoft... and how will there XML efforts impact WebMethods?

    Phillip Merrick: I think in any partnership a CEO is nervous when the other partner is so large and has such influence. But our relationship with Microsoft so far has been nothing but productive and we have found them surprisingly easy to work with. Some of our people recently came back from working with Microsoft at their TechEd conferences in Europe and Australia, so we are working with them worldwide now

    Fairfax, VA: Can XML, and webMethods, also help inside the firewall. For example, help companies link their legacy and new ERP systems.

    Phillip Merrick: Some of our customers do use us for internal integration inside the firewall -- but we've chosen not to make that our focus since XML and the technologies we have built around it (security etc) are more uniquely suited to B2B scenarios. We generally leave it up to our customers whether or not they use us for internal integration (aka "EAI").

    Chicago, IL: I have implemented a couple of procurement systems in the last year, I have noticed that the purchasing departments usually tend to be very opposed to a new procurement system being put in, How do you handle those kind of things?

    Phillip Merrick: Talk to their boss ;-) On the direct procurement side, where the ERP systems run sourcing and procurement, this is less of an issue -- we work with say the VP supply chain. On the indirect or operating resources side, e.g. things like office supplies, that is something that companies use an Internet procurement application like Ariba for -- so I guess they see this more than we do!

    Washington, DC: You say you are hiring. How does someone with a liberal arts bkgd, not much tech experience, break into a web technology arena?

    Phillip Merrick: Companies like ours need people in non-tech areas, like human resources, marketing and public relations. These areas provide great visibility into the tech business and can be a springboard into other parts of the business over time. I'm chuckling since our PR manager is sitting next to me, and she has a liberal arts background ;-)

    McLean, VA: Mr. Merrick, you have much to be proud of over such a brief period of time. Congratulations!

    Please describe your leadership style and how you empower your senior management and employees day to day.

    Phillip Merrick: When there is so much to do delegation and empowerment come pretty easy! My style tends to be to give people the oportunity to do their jobs the way they see fit, but understand that everyone needs to be accountable. That sounds a little more tough than I intended it -- we tend to have a pretty easy-going environment here, but at the end of the day we're all responsible for the success of the company.

    Berlin, Germany: Dear Mr. Merrick,

    do you know something about a company called software ag, they have created a programming language which called Bolero-xml based-. What do you think about Bolero.

    Phillip Merrick: I personally don't know much about Bolero, but I know our people in Europe are interested in it and in fact are working with Software AG in Germany.

    Chicago, IL: Hi, I'm trying to understand some of the relationships between companies, technologies, and applications. With the increasing attention being paid to application service providers, do you see webMethods' technologies making an impact on this market??

    Phillip Merrick: As larger companies adopt application service providers (ASP) they will need to integrate their internal applicaitons with the outsourced apps aat the ASP. So that is definitely a place we can help out.

    Shannon Henry: Tell us a bit about the company culture at webMethods. What's different about it than other firms?

    Phillip Merrick: We really do have a family atmosphere at webMethods. We believe that we are in a marathon race, not a sprint, so we're not into burning people out. There's a lot of trust and respect for the individual here, I think. Also a lot of open communication. To the greatest extent possible each employee gets the same level of detail about our business as do the board members. That helps everyone do their job more effectively. To cap it off we do free catered lunches!

    Washington DC: Phil,
    Your ads say you provide free lunch to your employees. What do you serve? What is a typical day at webMethods for the employees?

    Phillip Merrick: We run an internal intranet page where people get to vote on lunch choices! Peruvian and Red Hot and Blue have been recent favorites! But we're starting to put on weight so we might have to go healthier. A typical day at webMethods varies quite a bit by type of job or location -- but across the board I think everyone likes the challenge of working with major customers like SAP, Dell, HP and so on.

    Arlington, VA: Does XML, in all it's flavors, being included in a PERL package or other open source offering pose a challenge? Considering, the technology would be free would webMethods end up playing a "RedHat" like role?

    Phillip Merrick: It's actually what we do around XML and with XML that's most important. Things like integrating it with SAP, Baan and other big enterprise applications. And providing the technology to move XML business documents around the net securely and reliably. Also providing software and expertise to companies that want to create and integrate large business communities of buyers and suppliers.

    Herndon, Virginia: 1. In your mind, do you see XML complimenting EDI -in the traditional sense of B2B exchange over value added networks-, replacing it, or having no effect at all?
    2. What industries have you seen that have made the largest advances with XML in terms of standardization and DTDs? Have any industries moved to pure XML transactions?

    Phillip Merrick: XML can either complement or replace EDI -- it depends on the business scenario -- we have customers that have done both. For large companies that have trading partners already using EDI, XML and webMethods provide a way of extending B2B trading links to additional partners and additional applications -- without having to rip out the EDI investment. Actually we have partnered with Sterling Commerce to bring combined XML and EDI solutions to market together.
    On the 2nd question, the high-tech and financial services industries have probably made most progress with XML and XML-based standards -- in particular RosettaNet and FPML. We have seen complete trading networks move to XML adoption (eg around Dun and Bradstreet's offerings for instance) but not complete industries (yet!)

    Fairfax, VA: How does one go about building a community using XML on a shoe string budget?!!! How is wMethod different from BroadVision? How is XML different from JDBC and Microsofts ADO methods or for that matter ODBC is a universally accepted Standard for data translation.?

    Phillip Merrick: There's nothing to stop you from building a browser-based solution using say a Web server and Internet Explorer 5 (which has inbuilt XML support). It just won't integrate easily with high-end enterprise applications. On the second question, webMethods focuses entirely on B2B, while Broadvision provides the tools and software for B2C websites. On the last question, JDBC and ADO are database interface standards -- XML is a standard for representing data in text (typically Web) documents.

    San Jose, CA: Mr, Merrick

    Your company is represented in a number of cities worldwide. How many employees do you have in North America versus the international sites? What is the number of new hires expected in the next 6 to 12 month in order of geographic priority? Thank you and good day.

    Phillip Merrick: Currently we have around 150 employees in North America and about 12 in Europe. Of the 150, about 20% of that is in the Bay Area. We have only just established European operations. We're hiring in all geographies.

    McLean, VA: When will webMethods logo be featured at the Redskins stadium? Hopefully Snyder has you on his list for box seats.

    Phillip Merrick: Box seats for the redskins would be nice. Although being from Australia I still need American friends to explain the game to me ;-)

    Rockville, MD: How long before easy to use XML development tools are available for developers-business users. -ie Similar to what Front Page and other Graphical Tools are to HTML-

    Phillip Merrick: I believe that companies like SoftQuad already have XMl authoring tools. I think theirs is called XMetal, following on from their HotMetal for HTML.

    Alexandria, VA: What types of companies should be looking at these "B2B" solutions?

    Phillip Merrick: Any company that needs to get closer to either its customers or suppliers. We typically tend to work with large Global 2000 companies in industries like hi-tech and financial services

    Fairfax, VA: Are you at liberty to discuss WebMethod's involvement in Microsoft's BizTalk? What is the intended use for it?

    Phillip Merrick: We have been working with Microsoft to provide cross-platform BizTalk capability i.e. BizTalk running on non-Microsoft operating systems etc. We demonstrated this with them at their TechEd conferences over the past few months in the US, Europe and Australia. We also work with the BizTalk steering committee.

    Bethesda MD : XML is new to most of us. How would myself and others in the business of selling such products gain the the in depth product knowledge now before we get left behind.

    Phillip Merrick: I think the easiest thing to do is get on the Web and use it as a resource to further your learning. I can recommend and Robin Cover's XML Page. Also take a look at "XML Center" on Finally, I am co-chairing the XML99 conference in Decemeber in Philadelphia -- there will be lots of tutorials, many of which are targeted at XML novices.

    Shenzhen, China, nee Springfield, Va: Mr. Merrick,
    Here at, we are working to make a real eCommerce solution to Sino-International trade, with every step of the sourcing process from information gathering to shipping able to be done through our portal.
    What can XML do for us to achieve this goal that the HTML that we have been using cannot?
    I will be asleep during the live part of your on-line interview, but look forward to seeing your answer tomorrow.

    Phillip Merrick: HTML is for presenting data in browsers for human users.
    XML can do that, but also can make the data easily
    usable by computer applications -- so they can
    easily exchange data.

    AOL, VA: It seems to me that using XML for document handling in the B2B business will require a data base that supports multi-data types, yes? Much like an object oriented paradigm as it will need to manipulate html, xml, pdf, text, and other documents. Now is the performance a problem? What data bases do most of the clients use?

    Phillip Merrick: It turns out that the legacy and ERP enterprise applications large business already have installed provide the databases we need for storing the business documents. The trick is to map them into XML, then get that over the Internet securely and reliably -- and into an equivalent (say) order-processing system on the other side. Performance is rarely an issue given the network latency you have to deal with when transmitting data over the Internet.

    Astoria, NY: Does use or plan to use your technology?

    Phillip Merrick: was an early customer. We helped with some of the intercompany integration issues for the job classifieds postings.

    Shannon Henry: We're out of time for today. But thanks for the great questions (sorry we could not get to them all!) and thanks, Phillip, for enlightening us on the wild world of XML.

    © Copyright 1999 The Washington Post Company

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