Cloud Computing presents a great opportunity for start-ups who want to grow rapidly and scale dramatically, but there are considerations that need to taken into account to achieve a viable growth strategy in the Cloud.
This week’s EuroCloud day at the Google Campus in Tech City heard from a panel of entrepreneurs who discussed their own experiences of growing from a small base. The panellists were:
• Duane Jackson, CEO, Kashflow
• Piers Linney, CEO, Outsourcery
• Tim Barker, CMO, DataSift
• Jimmy Gasteen, CEO, Precursive
• Bernard Dallé, Partner, Index Ventures
The start-up credentials
PL: I went through the dot com start-up experience. We acquired a mobile phone business and used the cash flow to build a Cloud business. We are trying to empty the server room.
BD: We invest across all stages from very early and seed through to the main stage investment. The last major one we did was DropBox, but in the past we have done Skype and Betfair among others.
DJ: We’re a SaaS accounting firm with an emphasis on ease of use and automation. We’ve bootstrapped ourselves to where we are now, doubling year on year since we started.
JG: We offer SaaS project and portfolio management applications. We’re trying to solve the problem of the failed IT project.
TB: I’ve been involved with three start-ups in my time. The last one was acquired by Salesforce.com which meant I spent time inside the mothership of SaaS companies. Now I’m marketing director at DataSift.
Key challenges for growth.
TB: You need to focus on inbound marketing and demand. From a product perspective, it’s about product and packaging and positioning Focus on customer adoptions.
JG: Trust. People say ‘you’re handling my data, it’s sensitive, who else can see it?’. The second thing is that the product has to work. The customer is going to be paying on a month by month basis so they can cancel out. You also need to be clear about the benefits to the customer. What are the use cases that will change someone’s life.
DJ: The scalabilty of your business – all your accounting functions, sales functions, marketing. Getting the customer experience right. Get that wrong and you’ll know about it pretty quickly. You have technical people that you bring in from on premise companies and you repurpose them so that they acquire new skills and become highly valuable. Then the next start-up comes along and they’re off. The demand for skills is growing rapidly.
TB: If you haven’t got a great product it’s all so transparent now. You used to be able to do the proof of concept almost as the last stage, but not now. At Salesforce.com we used to push the product into pilots as quickly as possible.
BD: The most amazing thing about the Cloud is that technology has become abstracted. The emphasis has shifted onto product design and user experience.
When you need to get funding from a VC, what’s the best way to pitch?
PL: If you go to pitch to an angel investor, it’s about having taken things as far as you can. You have to make your offering as credible as you can. An angel will invest more in the individual than the business but when you get to Series A funding you have to have something developed fair enough along for them to get their heads around it.
DJ: There are analogies with being unemployed. If you’re serious about getting a job then you do your homework first. Different VCs are going to have different intersests so it’s up to you to do your homework on what’s going to be of most interest to each one. If you roll up and do the same pitch every time you won’t get the same result as you would if you pitch to a specific audience.
TB: VCs will invest in companies with momentum and relevance. How fast can you grow? What is the cost of customer acquisition?
JG: Having an ecosystem helps. Do you have others who will co-sell to their customer base? Being part of a wider ecosystem increases your chances. We are on the Salesforce.com platform so we can hook into that. You need to have a good team as well. Who are they? How will you retain them?
BD: Never send a blind email. Find a way to network with the organisation, engage in a dialogue. Have a differentiated value proposition. The second layer to this is product and go-to-market strategy.
Timing is everything.
BD: Get your product out there – iterate and innovate.
DJ: If your first release isn’t embarrassingly awful then you took too long to get it out. Our first release was embarrassingly awful but what we did get was immediate feedback. Other firms can take 2-3 years getting all the bells and whistles built in and then by the time it comes out the customers don’t want it any more. They could have used all that time to get something out there and get the feedback.
JG: Don’t spend years crafting a business plan. We’ve had about five Black Swan moments with people passing on, getting divorced, not having an internet connection for 2 months and so on. Don’t put all your eggs in one basket. Don’t spend three months pitching to one marquee client that may not come in.
What’s the hardest role to staff?
PL: Sales is the hardest one. People always complain about their sales structure. We had too many variables so we said we’re going to base commission on a share of revenue and if you don’t like it, move on. Some did, but our cost of sales is now far more in line with revenue.
DJ: Customer service and support. You’re supporting your own product so these guys need a lot of in-depth product knowledge. You need some really intensive training.
JG: Product and technology people. The Chief Technology Officer will set the product vision but you need good product managers when you’re in execution mode.
TB: Good user experience people and product management people. The translation from vision to what gets delivered is critical. Good product marketeers are hard to find.
Do you ‘eat your own dogfood’ and use Cloud technologies?
TB: Apart from PowerPoint, pretty much everything else is in the Cloud. We haven’t moved our financials into the Cloud because you need to look at the value you’ll get from making that huge change.
JL: We have PowerPoint and Excel not in the Cloud. We found moving to the Google Docs versions just not as quick as they should be.
DJ: Everything is in the Cloud except for our Office suite. Google Docs just isn’t there yet.
PL: We still have Office on premises. We could have used Office365 for non-power users.