Xata's Growth Vehicle

Jay Coughlan was ready to get back in the game. A little over a year after resigning as Lawson Software’s CEO in June 2005, Coughlan was looking for a Minnesota technology firm in need of fresh leadership.

Coughlan says that he left Lawson after the St. Paul–based business software firm acquired Intentia International AB, a Sweden-based enterprise software vendor, because continuing as CEO would have meant spending at least half his time in Scandinavia. “Although you could say I left a lot of money on the table, I had some family issues to deal with,” Coughlan says. Nine months later, his family was back in sync and it was time to find a job. “My wife was starting to say, ‘You’re bugging me, get back to work,’” Coughlan recalls with a laugh. “The pendulum had swung from, ‘You’re not home enough’ to ‘You’re home too much.’”

His criteria for a new employer were few but specific. “I was looking for an industry that was getting impacted by something that was forcing it to make changes,” says Coughlan, who describes himself as “a growth type of guy—more focused on the income statement than the balance sheet.” At the same time, he sought a private company that had a more predictable revenue stream than Lawson, “where every quarter was the proverbial fourth-quarter touchdown pass with time running out.”

A few months after starting his search, Coughlan’s network led him to a company he’d never heard of.

Founder William Flies had started Burnsville-based Xata (pronounced ZAY-ta) in his basement in 1985 after developing a device that electronically captures operational data on board trucks. Fleet operators use this data to monitor and manage fuel and truck usage, along with other operating expenses. The company’s name reflected Flies’ focus on transactional data—that is, continually changing information due to predictable business “events” (like, say, mileage per gallon).

Here’s what Coughlan saw under the hood: Xata’s revenue streams were limited, the company’s strategic plan needed retooling, and the trucking industry was under intense financial and regulatory pressure. What’s more, Xata hadn’t been profitable since 2000. On the other hand, in 2004, it released XataNet, its first software-as-a-service (or SaaS) product. XataNet, which provides fleet managers with around-the-clock, on-demand access to vehicle data through a fee-based subscription service over a Web browser, represented the recurring revenue stream Coughlan was seeking.

Xata met all of Coughlan’s criteria except one: It was a public company. Still, it was the kind of challenge that intrigued him. He crossed “privately held” off his list.

In October 2006, Coughlan became Xata’s CEO. It didn’t take long for him to discover that Xata’s challenges were bigger than he expected.