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Rally Software Development Corp.

INITIAL lIGHTBULB

After meeting as graduate students at CU-Boulder in the late 1980s, Ryan Martens and Tim Miller went their separate ways, but soon reconnected in Colorado in 1993. Miller founded Avitek, a Boulder-based software developer, in 1995, and Martens worked for him through Avitek's 1999 acquisition by BEA Systems. Both left BEA in mid-2001.

While Miller took a 16-month sabbatical and circled the globe with his family on a sail-boat, Martens was laying the foundation for another startup, Rally Software Development. Martens said his strategy was shaped by two key factors: the rise of Web services--i.e. online application-to-application communication--and the lack of standardization in the software engineering process.

"There's been a trend in the software industry to change the way we develop software," said Martens, "and the recognition that developing software is much more of a creative, craftsman-like process than it is an assembly or construction process."

When Miller got back to Colorado from his sabbatical in late 2002, he joined Ryan as a board member and an angel investor. He became full-time CEO when Rally closed its first funding round in the fall of 2003, with Martens taking the title of president.

"There were really two focuses we had when we started," said Miller. "Ryan was deeply passionate about the problem and building great software. I was deeply passionate about building a sustainable, great company."

IN A NUTSHELL

Rally's products and services help clients manage "agile" software development, a term coined by the IT community in 2001 and detailed on the website, www.agilealliance.org.

Agile methods have demonstrated double the productivity of software development teams.

However, it's not an easy process to implement. "It requires a lot of feedback," explained Martens. "We run very short, time-boxed development cycles. Two weeks is pretty common." This timetable requires a lot of coordination and communication, which is where the 35-employee Rally comes in. Two-week cycles are "a big mind-shift" for IT professionals used to multi-month stages of development, said Martens. "You have to run everything in parallel. You have to have a highly functioning team. Because it's new, how you grow it into large organizations and how you grow it into distributed teams is something that's being mastered as we speak."

It follows that Rally's flagship product, a "collaborative project management system" likewise named Rally, is on its sixth release in just a year. "It's a signaling and notification system to keep the team all on the same page in these tight two-week cycles," said Martens. Rally is subscription based, with a per-user fee starting at $65 a month.

Rally's customer roster includes such Colorado companies as WebRoot, Ping Identity, and CreekPath Systems. Tim Walker, WebRoot's development manager for enterprise products, gave WebRoot high marks. "They practice what they preach, and they listen to customer feedback." he said. "That relationship is outstanding."

"If you look at a company like Dell, they're masters of wringing the inefficiencies out of building a computer. They don't stock inventory. On demand, they put all these pieces together into a computer and ship it a week later. We try to get the same kind of efficiency with software development."

[ILLUSTRATION OMITTED]

--RALLY CEO TIM MILLER

THE MARKET

Rally's market consists of software development teams of all shapes and sizes, said Martens. But the future may hold vertical expansion into other markets, namely electronic games and motion pictures. The processes involved are "really similar" to software development, said Martens.

FINANCING

Rally closed on a Series A round of $4 million in October 2003 and a supplemental round of $4.5 million in January 2004, with Mobius Venture Capital and Boulder Ventures the major investors on both occasions. The company is currently pursuing a Series B round it plans to close in early 2006. "We're talking with both coasts," said Miller. "We have a long list of people who are interested in our deal."

Where: Boulder

www.rallydev.com

Founded: 2002
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Title Annotation:Tech Startup of the Month
Author:Peterson, Eric
Publication:ColoradoBiz
Article Type:Company Profile
Geographic Code:1USA
Date:Nov 1, 2005
Words:655
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