A history of Pega: Our Founder & CEO looks back

Watch as Alan Trefler tells the company’s story in his own words – from the origins of the name Pegasystems to the reasons why chess is built into our DNA.

Transcript:

Starting Pega at the age of 27 was a pretty daunting experience. It was a time in my life where I had to make some decisions. The company I had been working for had been acquired, and even though I could easily find employment elsewhere, I really didn't like working for these businesses where one day your work would get subsumed and crushed in another company's realm. I had been accepted to Stanford Business School and I thought about going there, but my father had died a couple of years earlier and I had real ties to the Boston area that would've made it difficult to leave at that time. So I took a third choice and said, "We got some ideas. I'm gonna scrape together some money and see if we can actually, well, bring these ideas to fruition." It was early in 1983 and it was an amazing time for technology. The PC movement was, well, at its inception. Computers were moving from being these large mainframe machines to things that were far more accessible, not just physically smaller, but also amazingly powerful, more versatile. Lots of stuff was happening. Yet in this world, the way we engaged with the technology was too often by old standards. We weren't really taking advantage of the how that this technology could empower business people, the ways in which this technology could change the balance between how a business person asked for something and how they got it.

My father came from Europe and chess was very, very much a part of the family culture there. I wanted to learn, and he taught me chess, and he would consistently crush me. I'd get myself into a losing position, then he'd reverse the board and take the other side of it, and then he beat me a second time in the same game. I decided at that point that A, I liked chess. B, I clearly needed to study it more and like get a rule book. And I thought it would be an interesting thing to become good at. When I got a little older, I started to get better at it, and I entered a major international tournament called The World Open. There were over 1,000 players. I was rated like 120th out of the 1,000, and quite improbably I ended up tying for first in the World Open Championship. But the most interesting thing about that is it got me into programming computers to play chess in college. And the whole idea of trying to capture the way a chess master thought about a position, we asked the question, what if we could take this thinking, this approach and apply it to business problems? And trying to do that in a way that wasn't super, super techie. And if we could, maybe we could get the business people completely and differently involved in how their systems were built and how their systems grew and changed. And that just seemed tremendously exciting.

The Pegasystems name came out of a couple of desires. One of the things I felt very strongly is that the name should not be the name of a person, nor should it be a collection of, you know, initials. And so we came up with the idea of Pegasus or Pegasystems. I liked it for two reasons. One, you know, it had a horse in it. And, you know, being a chess player, being able to have a chess piece be a critical part of the logo, of the firm, that sounded pretty good. And the other is if you know the story of Pegasus, you see Medusa, she was slain by a Greek hero called Perseus. And when he lopped her head off, from her blood swang Pegasus. You see, me and my two co-founders, we really didn't like the company that had been purchased and had sort of, we thought sold out the staff and didn't really feel like we were being treated in the way we wanted to. And me and my partners, we thought there'd be a real opportunity. We had decided we wanted to be a Cambridge company. So we found a place on Main Street in Cambridge that exists to this day. And we got a third floor walk-up. There was this sort of renegade, super good ice cream place, literally next door called Toscanini's. Toscanini's exists to this day. They've now moved directly across the street from us. So I take that as a very, very good omen. But one of the things we needed to get moving was a computer, a meaningful computer on which we could build this mission-critical software.

Now, the computer systems at the time that we could use were implemented by IBM, which was an enormous machine we could not possibly afford. And Digital Equipment Corporation, which created a machine called the VAX, which is about the size of a very large dining room table and has probably 1/100 of the power of my current cell phone. And, you know, that's how we built the first generation of our software. The VAX, when it came, needed to be hoisted up the elevator shaft because there was not really a working elevator at that time. So it got sort of hoisted up the elevator shaft and there was a bit of a crisis 'cause I'd gone out of the office to meet with a prospect. I came back and one of my co-founders said that he had sent the VAX away because we didn't have the right equipment to hoist it up. And so we went running around the street trying to find the truck with the VAX in it. We got the VAX back, the VAX got hoisted up, it got assembled. We didn't have a computer room. So in the summer, we stuck lots of window air conditioners in the windows. And in the winter, we actually opened the windows. You had to make sure the screens were down or the snow would get in. But there was a day when the Toscanini's offices almost really, really damaged us.

You see, Toscanini's had a business office in the building, 875 Main Street that we were in, and they were a floor above us. And one day their refrigerators in that office failed on a long weekend, I believe it was. And this strange goop began leaking down towards the computer from the ceiling. And thankfully, we were working all the time. So we were like there. We were able to put a tarp over the computer. We weren't sure what it was. Originally, there was a hypothesis it might be sewage, but somebody bravely sniffed it closely and determined it was melted ice cream and our VAX was saved. But that was our Toscanini near death experience. I'd inherited a little bit of money from my dad, but most of it came from my mother's retirement funds, over 300 k, her entire future. She put it right on the line. You know, it wasn't really a traditional investment where the investor takes risk. This was a situation where my personal obligation was absolute failure was simply not an option. I was gonna pay her back or die trying. Literally as soon as I could, I took out a life insurance policy to ensure that even if I did die, my mother would get paid back. And finally, after nine months with selling no software, in the same single month, both Citibank and Bank of America bought. So we went in that instant from being, you know, on the brink of starvation to dramatically oversold. And what I'm really proud of is now, you know, 34 years after they first went live in production, both of those clients are customers to this day with, you know, four generations later of technology, sticking with us and growing from that initial base, which to my mind actually shows our level of commitment to bring our clients with us. You know, we've gone from an idea to a sustainable business to a business that now can really influence very significant things and really help organizations and help people globally. At the same time, I see so much more that is possible and that we can do. And you know, it's important to me that we're doing good works, we're doing things that are actually going to be helpful.

Pega's mission is about empowering business people by fundamentally changing the way that they think of applying computer technology to their businesses. Our mission is to really radically shift what has been traditionally an an IT sort of approach to something that brings business and IT together and really puts businesses in much more control. So I think it's very much about changing the dynamic about how technology is applied and to do it for the good of clients and to do it for making the world just a more efficient and effective place. It's an exciting mission. I think it was exciting when we started. It's got a long runway. Customers expect more, technology does more. We have a tremendous future ahead of us. There's so much more we still can do.