Q&A: Jim Hopkins, CEO Tripos Discovery Informatics

It's been a rough couple of years at St. Louis-based Tripos Inc. Staggered by a severe slowdown in business for its Discovery Research division due to cheaper labor overseas, company shareholders in mid-March voted to sell both the discovery and informatics divisions as separate pieces. San Francisco-based private equity firm Vector Capital recently closed on its $26.5 million purchase of the informatics division and hand-picked technology veteran Jim Hopkins as the company's new CEO. Hopkins recently took time to chat with Chief Editor Chris Anderson about the company's future.

DDN: What do you see as the significant opportunity for Tripos and why was it attractive to Vector Capital?

Hopkins: Vector doesn't look at any particular vertical in the market. What Vector looks for are companies that are undervalued in the market—and we think Tripos is certainly one that is undervalued—that have a good solid technology base and people who understand that technology; companies that operate in markets that could be expanded through the use of additional capital and I think Vector also saw the opportunity for consolidation and building a company with a little bit of a larger foot print through deploying capital correctly.

DDN: So in the informatics space, Tripos hits all of those factors?

Hopkins: Yes they were undervalued by the market, their customers have been with them for a while and the SYBYL product line is well regarded by the computational chemistry marketplace. The company has developed new initiatives, they continue to invest in science to stay on the front edge of what their technology needs to do. So they fit the bill right down the line for Vector.

DDN: Do you think the company was undervalued due to running both an informatics and a research division?

Hopkins: I think what that did was add a lot of complexity to the business for a shareholder to understand. In addition, that business, since it was manpower intensive, is much more susceptible to damage or cannibalization by shifting those kinds of projects to lower manpower costs in other parts of the world.

DDN: What do you think your customers should know about the future direction of Tripos?

Hopkins: One, we want to improve the value proposition around our current informatics products line, make sure that the SYBYL and any new technologies that are introduced are complementary, to make sure our customers are getting good customer support and we are keeping the technology current. Second, that we have developed new products that use a new way of finding and visualizing data under projects with one or two of the big pharmas and we will end up productizing some of those technologies beyond the extent of what they are right now [with the intention] of bringing them to market as enterprise type products. We think the thing that makes Tripos viable right now, is that the current owners of the company have a good capital base behind them and because we have narrowed our focus down to the informatics space in the life sciences, we are profitable now and a much more stable company so these companies can invest long-term in working with us.

DDN: When you are looking to do enterprise class products, much of what Tripos has done are more desktop products, does this signal a slight shift?

Hopkins: I don't think so. If you look at what I consider to be the best of the enterprise class products, if you design them correctly, they are scalable. You can go into a department, but then you can expand from the department to the entire organization and to do that you have to design it with a scalable architecture in mind. You have to know how you would run 1,000 users in addition to five users and you have to have that built into it when you deploy it to the five users.

One thing I do know is that if you build something that you can only sell to 1,000 users, the sales cycle is incredibly long. In the meantime, there may be 20 or 100 people in the company that could buy the product on a departmental basis and get value out of it immediately and then establish credibility for the enterprise sale later on. My view is the way to do enterprise sales is to design systmes that are scalable at the outset and if you sell a 20-seat license that is fine.

DDN: So you feel Tripos products were designed this way?

Hopkins: I feel they were designed properly to be able to scale that way, but they weren't positioned or marketed that way.

DDN: As you take over management of Tripos, what are your first tasks to get it running as solely an informatics business?

Hopkins: Well part of that is getting messaging out to all our customers and partners in the market—I've got the sales and marketing people right now organizing a road show and a call campaign—and I intend to talk to a lot of customers over the next few weeks to explain to them what has happened with Tripos—to let them know that we intend to carry on the tradition of science this company has had and continue to support its product line. As part of that conversation I want to get across the idea that we want to improve the value proposition of the SYBYL product line. Because of the fact the company got involved in a lot of things, perhaps they didn't focus the same kind of mindshare and effort behind this product line as they would have if they weren't involved in so many things. I think that being able to provide more focus to that product line can improve the value proposition for our customers.

DDN: Why focus on SYBYL?

Hopkins: It provides a big slice of the company's informatics revenue right now. It's the engine around which a lot of the other products work.

DDN: In organizing the road show, was there trepidation in the market since it has been reported the difficulties the company has gone through?

Hopkins: We saw that effect in the market and it is an understandable thing. If you are a big pharmaceutical company—and Tripos had a business in the past where they did fairly large-scale systems projects where we would integrate our technology into a pharmaceutical company's technology—if I were running the big pharma and had seen the balance sheet recently and the troubles that were involved, I would really be asking myself if it is advisable to enter into a long-term relationship. So I think getting the word out that we have a much more solid capital base and a tighter focus should allow us to allay some concerns that I believe have been keeping us from getting some of these larger transactions.