40th Anniversary of the Founding of Paciolan

Before I entered the Research Game, there was Paciolan.

Today, July 1, 2020, is the 40th anniversary of the founding of an amazing company – Paciolan.

I want to take this opportunity to join with my co-founder, Dr. Thomas J. McQuade, to celebrate this day, and to give our reflections on the events, and principles, of the founding of this company.

For many people Paciolan is well known as the industry leader in venue-controlled ticketing with more than 500 customers issuing more than 120 million tickets per year. The client base includes college athletics, arena and professional sports, arts and entertainment, and many others. Today it is the second largest primary ticket provider in the United States. 

Paciolan Website

But few people know, or can appreciate, the modest beginnings of this commercial software success. Here is the story of the beginning.

I grew up in the suburbs of Washington, DC and attended the University of Maryland, College Park, earning degrees in Information Systems and an MBA. I also earned the Certificate in Managerial Accounting while working in the Office of the President of the University first as a systems analyst and later as a budget analyst. I came to California in 1976 to work as a budget officer at the University of Southern California and many good things followed.

Thomas grew up in Australia, and was one of the first computer science Ph.D.s in that country. He joined Burroughs, a large mainframe computer company, and emigrated to the US to work for them, first as an instructor in programming methods and later in the development of programming languages and compilers.

Thomas and I met in 1977 when we both joined Southern California Data, a small minicomputer distributor – me as its chief financial officer and Thomas as its in-house programming expert.  We were each 30 years old. 

Despite our very different backgrounds we hit it off, and in our spare time we did some consulting work together at the University of Southern California. The result of this collaboration was an increasingly sophisticated application to assist USC with its huge sports customer base and ticketing challenges. From time to time we would meet with visiting college athletic department personnel at USC on game day to show them our system. Everyone seemed to be interested in using a computer to issue and account for tickets, but no one came forward to seek our services for their college athletic department.

Things changed in July of 1980. Thomas and I were having discussions with Bill Erickson, a vice president at San Diego State, about adapting our system to their campus. Besides automating ticket sales, Bill was equally concerned with controlling the financial affairs of the Athletic Department, which was a separate accounting entity from the SDSU campus. Bill reasoned that if we were selling him a computer for tickets, why couldn’t the same computer track the Aztecs’ finances, and give transparency to the University financial professionals? This conversation led to a trip down the I-5 Freeway from LA to San Diego on Tuesday, July 1, 1980.

Thomas and I spent the day meeting with Bill, Marge Peet, Rick Perry, and others to discuss ideas. Bill and his team made a commitment to us: SDSU would buy our ticketing system if we would also develop a fund-accounting system for them that included budget, financials, accounts payable, and an interface to the ticketing system for revenue accounting. On a handshake, Thomas and I agreed to do it. We promised to send a proposal/contract to Bill in the next day or two. Everyone was filled with excitement.

On the drive back to LA, Thomas and I were reflective for the first few miles. Then the reality of what we had committed to do sank in – we had essentially committed to starting a new company and going seriously into the college sports ticketing market. Our first order of business was to decide what to call our new creation. We agreed that, since “accounting” was the factor that sealed the deal for us, we should name the company after the creator of accounting. Done. Then Thomas said to me (the certified accountant and MBA), “OK, who is the father of accounting?” I said that I had no idea. We decided that we could figure that out later. The remainder of the ride was filled with planning how we were going to pull off this feat of adding an accounting system onto a ticketing system and do it all in three months.

In short order Donna, Thomas’ wife, did the research to discover that the person who could most completely be considered the father of accounting was a Franciscan Friar named Luca Paciolo. Good grief – how would anyone be able to remember or pronounce the name? Undeterred, and committed to our principles, we established “Paciolan Systems” in our first board of directors meeting on July 21, 1980.

The more we learned about Paciolo, relying on Donna’s excellent research, the more the name and novelty grew on us. The name stuck – and both of us are so pleased about that (be sure to read Thomas’ description of our first five years elsewhere in this blog, which contains some fascinating facts about Paciolo).

Paciolan: The First Five Years

Starting a company was new to both of us, but we figured things out as quickly as we could. There are a number of remarkable things about those early days, and our approach to building a company from scratch. Unlike the business development activities that I see today, Paciolan had no investors (other than $1,000 that we each contributed to get Paciolan started – if we didn’t have revenue, we didn’t get paid!); we had no venture capitalists, no funding rounds, no roadshows to lure investors, and, perhaps most importantly, no “exit strategy”! Why would anyone want to “exit” from a company if you were building it to attract customers and give them such good service that they would never leave? Investment gurus probably disagree with me, but I’m very proud of the way we created and built Paciolan – solid principles and unwavering ethics.

We only had three months to complete the accounting system and to adapt USC’s subscription ticketing model to SDSU’s per-event ticketing custom. I would create the design for a financial accounting system, formulating the elements for a ledger and journal (Paciolo would be proud) and transaction indexing, while Thomas would program his fingers off creating screens and reports. Once every week or two I would take a computer tape of fresh software down to SDSU, load it onto their Microdata computer, and teach the staff what to do. I promised to return soon with more software and new training. This process continued until September and the beginning of the football season.

Sure there were bumps in the road, but overall we delivered what we had promised, and SDSU joined USC as our two appreciative and loyal clients. Forty years later, both schools are still in the Paciolan fold. Pretty amazing, don’t you think?

1980 was still the heyday of the mainframe – but Paciolan ignored that legacy in favor of the microchip. Mini-computers – systems the size of a refrigerator – were coming into common use with “powerful” (for the time) processors and no requirement to be housed in large refrigerated datacenters. A mini-computer would be a perfect machine to live in a college athletics department. The most primitive IBM PC was still a year into the future. Relational databases, ubiquitous today, were in their infancy and Oracle wouldn't be created for three more years. Commercial internet service was a decade away, and adoption of email as a common communication tool for everyday use wouldn’t appear until about 1990. Our computer programs needed to exist in computer memories measured in kilobytes – about one millionth the size of the memory in your smart phone. Disk drives for mini-computers were measured in megabytes - also one millionth the size of the terabyte backup drive you bought from Costco to back up your photos. I remember my euphoria the day that we could buy a 300 megabyte disk drive – we could finally store all the tickets for the Rose Bowl for a full season of football on one disk! It is a miracle to me that we were able to accomplish so much with such limited technology.

The technology partners that we used included Microdata, Digital Equipment Corporation, Ultimate Computers, Prime Computer, and Pick Systems. All those companies have vanished and Paciolan has survived principally because the software was flexible enough to be moved from one brand of computer to another and the services provided to customers are unparalleled in the industry.

In the early days our primary competitor was Ticketron, a subsidiary of mainframe manufacturer Control Data Corporation. You wouldn’t imagine that our little company could possibly compete with such a computing giant. But the systems that we developed all worked together, and were finely tuned and adapted to the specific needs of each client. The mainframe approach couldn’t compete with that flexibility and suitability for purpose. After the early 1980’s we never lost a competitive challenge to them, and in 1990 they were purchased by Ticketmaster.

Thomas has done an excellent job of telling the early history of Paciolan, and you really need to read it. But my fondest early memories are the excitement of the first customers – USC, SDSU, Illinois, Washington, Nebraska, Fresno State, and Stanford. We proudly hung each of their banners in our little office and dreamed of totally dominating information systems in college athletics (a dream that eventually came true).

Another little-known fact is that the accounting system that we developed for SDSU in three months went on to a much greater purpose. My association with USC has many aspects both as an employee and a consultant. In 1981 I was aware that USC had been struggling to implement a modern accounting system from a leading university software systems vendor. USC had spent millions of dollars on a system that simply wouldn’t work. I made an outrageously bold proposal to the Senior Vice President of USC, John Strauss, that Paciolan could modify our sports accounting software to efficiently run the $1 billion university and its medical school. 

Jon liked the idea, but made us perform a feasibility study first.  We surmised that using Prime Computer's most powerful system, we could support 100 active devices and complete the project as proposed.  Jon quickly agreed to the idea, but gave us an almost unimaginable deadline of nine months for full implementation (July 1, 1982). With the support of Brian Gladish, an excellent programmer and an unsung hero of Paciolan, the two of us successfully implemented a system that included general ledger, budget, accounts payable, purchasing, cash receipts, and a novel interface module that allowed USC to use auxiliary systems (such as for the bookstore, payroll, etc.) for their utility, but transfer financial transactions to the accounting system easily and quickly. Two people. Nine months. I think most folks can’t believe this reality. 

The system was such a huge success that USC’s 1984 printed financial statements praised the system and even included pictures of the various system modules in their glossy financial report. USC continued to use the “Paciolan Financial System” (PFS) for 30 years which is an eternity in today’s rapidly evolving software field. A CIO colleague, who has the facts to know, has told me, “Paciolan saved USC tens of millions of dollars on financial software over three decades.”

While the ticketing system and its associated applications went on to amazing success, the financial software didn’t. It is one thing to get an Athletic Director to believe in a small company with an unpronounceable name, but quite another to get the CFO and CIO of a major university to do the same. Even though everyone who saw PFS marveled at its flexibility and utility, few made a commitment to purchase it. The obstacles that the system wasn’t implemented on a mainframe and supported by a large company of consultants were insurmountable. PFS did, however, enjoy success at the Kamehameha Schools / Bishop Estate in Hawai’i, the Hastings College of the Law at the University of California, and a few other non-profit clients.

By 1990, ten years after the founding, Paciolan had progressed to the point that my contributions could not have the impact that they did in the early days. For nearly a decade I had flown back and forth across the country marketing both product groups -- as many as 100 flight segments per year. I decided that this wasn't the life I wanted any more.

In early 1990 USC came to me to ask if I would be willing to return to campus to help lead the Information Sciences Institute – a world-class computer research organization. I gladly accepted the challenge and entered the Research Game, working with internet pioneers such as Jon Postel and Paul Mockapetris. Research became my passion and profession until I retired from Scripps Research in 2019.

I think the greatest compliment that Thomas and I can pay to each other is that we complemented each other perfectly. Our different backgrounds and skill sets gave us distinct approaches to problem-solving, and, like the Wright brothers, we employed a creative tension, constantly challenging each other, to arrive at the right solutions. Neither of us could have done this alone; each of us was grateful for the other.

There are scores of amazing people who contributed to the success of Paciolan, and I don’t mean to minimize their contributions – there will be a time to remember and praise them in the future.

For today I just wanted to recall an incredibly special day and a very special friend. Forty years later we have come together to remember the boldest moments of our professional lives, and to savor our accomplishments. We hope you have enjoyed, as much as we have, this truly short history of the founding of Paciolan.

Cary Thomas
Carlsbad, California
July 1, 2020