CEO Resigns as Citadon Finalizes Merger, Raises
$14 Million
February 27, 2001
By Judy Schriener
Doug Sabella resigned last Thursday evening
as CEO of San Francisco-based Internet company Citadon Inc., reportedly
to head a public company, as yet unnamed. Citadon Chairman Rob Majteles
will step in as acting CEO. Sabella's resignation, which took board
members and employees by surprise, was effective immediately. His
departure came just as Citadon was pulling in $14 million in capital
and a few days before the merger of Cephren and Bidcom became legally
final yesterday.
Sabella was unavailable for comment. An announcement is expected in
the near future as to where the former Bidcom CEO is going; Majteles
says Sabella, a former Lucent Technologies executive, told board members
that "this wasn't his cup of tea." Citadon will launch a search for
a new CEO.
Citadon executives told Citadon employees
about Sabella's departure at an all-hands meeting yesterday. They
didn't seem to be very concerned, says Majteles. He explains, "They're
more interested in the money than in who is in the chief overhead
chair." Citadon has about 185 employees in offices in San Francisco,
New York City and Palo Alto, Calif.
Sabella's departure didn't seem to rattle
investors, as evidenced by some clients receiving the news from
a Citadon executive joined by an investor to reassure them that
all was well. The $14 million, which Majteles says will take the
company through the third quarter of this year, is coming from Citadon's
major investors, which are Internet Capital Group, GE Corp. Hines,
Warburg Pincus, Partech International, Goldman Sachs and the Oracle
Venture Fund. Bechtel Group and Fluor Daniel also invested, says
Majteles. He hopes to raise another $11 million, but is not in a
hurry, he says. "The next money is a cushion, not a necessity,"
he says, adding that projections are for Citadon to become profitable
in the fourth quarter.
Meanwhile, Citadon officials emphasize that
it's business as usual. The technical merging of the Cephren and
Bidcom extranet services is complete, say Majteles and Ian Howell,
senior vice president of strategy and business development. Citadon
recently released its version 4.2.2, which includes a "program reporting"
function that allows companies with multiple projects using the
Citadon platform to view data for their portfolios, says Howell.
The company is working on its next release.
Citadon is expecting sales of $2.5 million
this quarter, compared to $750,000 in the same quarter of 2000.
Last year's total revenue of the pre-IPO company were $6 million,
says Majteles. "We need a $6-million fourth quarter to break even,"
he says. He thinks it's doable. "Running from a $2-million first
quarter to a $6-million fourth quarter is not a very big jump,"
he says. Whereas once Bidcom and Cephren were focused on going public,
now Majteles says there are "no specific plans" for that. "Our focus
is on hitting our own numbers so we don't need any capital, public
or private," he says.
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Majteles says he is disappointed that Sabella resigned. But he plans
to spend 100% of his time on Citadon for the foreseeable future to
keep the company on track. He points to a sign at Donner Pass near
Lake Tahoe, referring to the party of adventurers who ran into trouble
and ultimately turned to cannibalism of their fallen comrades to survive.
"They ran into trouble and they did what they had to do. I kind of
admire those people. There's a little sign at the base of the pass,
'The weak didn't make it; the cowards didn't try.' It's not a vision
phase that we're in at this point-it's an execution phase."
What is means to the industry: The
merger is legally complete, the products are technically integrated,
$14 million is in the bank and the management team other than Sabella
is in place so Sabella's departure should not hinder Citadon's progress.
Sabella's resignation appears to be a personal decision not indicating
any turmoil in the company. It will be interesting to see if Sabella
stays in the construction industry or exits it. Majteles is a good
rainmaker and will keep things in check until they find a new CEO.
This company remains one of the dot-com leaders in the construction
industry.
Photos courtesy of Citadon
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