March 2003

When you walk into the lobby of webMethods in Fairfax, VA, you know right away what this company is about. Colorful displays along the wall explain how this integration software company helps 7-Eleven stores track orders with nearly 2,000 vendors and get multiple financial systems at the Environmental Protection Agency to communicate with one another. A photographic mural on another wall of people working in several community settings tells you that webMethods is also about connecting people in their company with people in need.

WebMethods, a leader in providing web-based integration software, has enjoyed an impressive trajectory since 1996, when Phillip Merrick and Caren DeWitt began their company in their Burke, VA, home. Phillip was writing code, and Caren was working in marketing at AOL and helping to market the product at night. Phillip adapted protocols of the World Wide Web to create software that enables different computer systems to communicate with one and another. “This was a solution to a problem that had perplexed many people for a long time,” Phillip says.

In the summer of 1997, the fledgling start-up only had only $31 left in the bank. Just 18 months later, when integration technology caught on and investors like Dell and Goldman Sachs stepped in, webMethods had $39 million in venture capital financing. In February 2000, the webMethods IPO earned a record-breaking $170 million in a single day. Phillip and Caren believe they are simply lucky and blessed. They had a vision and a good idea at just the right time. And they had good advisors and angel investors early on. The company has managed to ride the tumultuous economic tides of the last two years with relative calm. “The market isn’t rational,” says Phillip, “so I just remind everyone to keep their focus on what problems we’re solving for our customers.”

Phillip and Caren met during a Bible-study retreat at Rehoboth Beach. Phillip, a software engineer from Australia, and Caren, a Californian employed at a marketing firm, were both working in Washington, DC, at the time. Caren says they were idealistic then and are only a little less so today. According to Caren, the success of their venture brings with it, a deep sense of responsibility for family and friends who invested early, to the company’s employees, and to other people who have not been as fortunate.

Phillip and Caren became VPP founding investors in 2001. That same year, they decided to start the webMethods Foundation. In 2001, between the births of the couple’s two sons, Caren, who was driving much of the marketing for the company, became the chairman of the new foundation. The organization is funded through the sale of webMethods stock donated by investors and friends. The foundation’s assets are currently worth about $5 million. The vision, she says, is to “help underprivileged people achieve their potential.” She says she has a special affinity for poor, working families, and the foundation is exploring ways to assist those families through programs in housing, education, and health care. The foundation board decided to explore each of these funding areas one year at a time and they invited program officers from other area foundations to be their teachers and guides.

In 2001, the foundation gave $497,000 in grants to housing programs, including $40,000 to help the Center for Multicultural Human Services (a VPP investment partner) provide emergency housing for its clients. In 2002, the foundation’s grant-selection team, made up of employees, made $468,000 in grants to fund education and workforce development projects. This year, the grantmaking team will focus on health care. According to the foundation’s executive director, Diane Tollefson, the leaders of the foundation will step back at the end of the year and assess what they’ve learned. They will be looking for points of intersection among the three areas where their funding can benefit entire families.

In addition to traditional grantmaking, Caren would like to see the foundation pursue more targeted, involved funding relationships. “We wanted to learn more about venture philanthropy, which is why we invested in VPP,” she says. Their first endeavor in this area is a multi-year investment in Jubilee Enterprise of Greater Washington, plus planning assistance to help the organization implement a new homeownership program for low-income families.

“Our hope,” says Diane Tollefson, “is to create a niche in areas where most other funders don’t think to go.” To learn more about the webMethods Foundation, please visit their website.