Ten Things I Wish We'd Known (a wholly incomplete guide to running a cloud business)


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  • Founding team – hacker, product guy, hustlerVertical – something you’re passionate about (you’ll probably be doing it for q a few years) that’s ideally big enough to support several multi-$BN companiesTechnology – if you’re building enterprise, use a technology CIOs have heard of an understand. Practically this means Java, .net, Rails, and Python. You might think Comet and Node are super duper cool but the guy buying your software for a ten thousand person rollout considers javascript to be something people use for form validation.
  • Often asked when is a good time to launchUnless you’re a seasoned entrepreneur or possess a crystal ball, getting early feedback from customers is key. What do they like? What don’t they like? What would they pay for?Asking questions is good. Getting answers is even better. Sitting on your product is bad. And if you’re worried that someone you speak to is going to drop what they’re doing and run home to copy you – grow up. Anyone with the capacity to build something probably has a load of stuff going on. And, chances are, your initial idea probably isn’t that good. So – go out, get feedback and iterate.
  • A couple of great quotes about launching early.
  • Who are you selling to? Startups or enterprise? Very hard to do both. Packages work well for small businesses but for big companies go with per-seat. Why? Easy to sell, easy to understand, easy for partners to resell and it scales! Also - land and expand. Easier to sell to an existing customer and as SVP Sales Simon O’Kanesays – better to get a score on the board, prove value then upsell like crazy.
  • Who are you trying to displace? Ideally it’s a huge company (for us it was Microsoft’s SharePoint), legacy technology like email or an antiquated process. Rally the entire business around beating it – have your engineers ensure your product is slicker, have your marketers tell the world why and have your sales guys laser focused on reaching their customers.And stick to your guns! Very early onwhen talking fidelity, simon asked “what is your equivalent to Siebel in the sfdc story, sharepoint?” I said, yes. But then we spent 3 years running away from it.
  • focus, focus & focus some more. in our first board meeting with eden ventures, ben tompkins asked us which sectors we would focus on, we named 5. he said, pick one, we stuck with 5 (and all sizes of companies in it) – and every year as we have become more focussed we’ve become more successful. focus, or lack of it, as they say, is the number one startup killer.Who’s ever heard of Veeva Systems?Founded 2006. They raised very little capital ($7M) and just completed an out of the park homerun IPO ($2.5B valuation).   Closed first day at almost $4.5M market cap.In their FY ended Jan 2013, they did $130M serving just 134 life sciences customers. Not too shabby and highly focussed.The more focused you are, the easier it will be to succeed.Huddle has many use cases so we’ve been all over the place.
  • But focus isn’t sexy. Concentrating on one vertical isn’t sexy. Building something for everyone in the world is sexy. Something your friends and family use is sexy. Something that’ll just run itself while you flit between writing code and taking long weekends is sexy.I’m sorry to break it to you but your cloud startup probably won’t up as the sexy, low friction business model you probably first dreamed of.Basecamp in 2006 exampleHowever, I think building a big successful company is sexy. You’ll hire marketing, finance (who’s going to chase those big companies to pay within 30 days), customer success, operations
  • Andsales people -lots of them.For the product-minded entrepreneur, hiring of hordes of fat-tied salesmen – the kind of people who would sell their grandmother in order to get the commission to buy that big old watch they’ve been looking at – can seem frightening. However, like all hiring, bring on the right people and you’ll find that salespeople can propel your business from the minor leagues onto the world stage.All great cloud businesses – Salesforce, Yammer, Workday, Marketo, Jive, Box, Successfactors, Huddle (!) – have huge sales teams. Kind of dirty, not very sexy but hugely effective and very profitable if done right.This bring me to my next point.
  • Bet on passion and intelligence amongst your ‘doers’ but bet on experience and seniority for your leaders. but be careful; hire for what you need now, not what you think you will need in 2 years. but then be ruthless – hire new/better people when you need them – don’t get stuck in the loyalty trap of promoting people as you grow who haven’t got the experience to take you to the next stage (your leaders need to know the playbook, your doers need to have the passion, energy and intellect to execute it)
  • Dozens of advantages of operating as a pure SaaS service – cost, scalability, time to market, recurring revenues - but as you grow you can be sure that large customers will ask for on-premise versions. Something we’ve had to deal with.Jive on-prem example.You may have to provide on-premise software in the end but hold out as long as possible. Whole new set of issues to deal with.
  • I’m quick to tell many entrepreneurs that they don’t need to move to the San Francisco Bay Area in order to succeed. Many industry verticals that are better suited to being in London or NYC.However, like broad consumer cloud is different. West coast investors have made a ton of money on cloud businesses in the past and really get it. In the US you will raise double the amount in half the time for twice the valuation, in the US. Also, US acquirershere. That doesn’t mean you have to be based there though.
  • Being a leader of your business means being a showman as much as an operator (perception= reality) We’re generally pretty useless at that in the UK, but the US are very good at it
  • Ten Things I Wish We'd Known (a wholly incomplete guide to running a cloud business)

    1. 1. Andy McLoughlin, Co-founder Follow me @bandrew
    2. 2. Content collaboration for government & enterprise Serve 100,000+ organizations London, San Francisco, NYC, Washington DC Founded 2006 in London. 175 staff across four offices in two countries. Raised $40M in venture capital. Investors include Eden Ventures, Matrix Partners, Jafco Ventures, DAG Capital, In-Q-Tel and Webex founder Subrah Iyar.
    3. 3. Ten Things I Wish We’d Known (a wholly incomplete guide to running a cloud business)
    4. 4. Get the basics right
    5. 5. Launch early, monetize later
    6. 6. If you’re not embarrassed by the first version of your product, you’ve launched too late. - Reid Hoffman Stealth mode is for planes, not companies. - RRW Commenter, circa 2009
    7. 7. Get smart on pricing
    8. 8. • If you can, pick a bad guy Pick a villain
    9. 9. Focus
    10. 10. (In almost all cases) You’re building an ‘unsexy’ business (So deal with it)
    11. 11. Hire smart (and avoid the loyalty trap)
    12. 12. Stay SaaSy
    13. 13. Head West
    14. 14. Perception = reality
    15. 15. Things are never as good as they seem. But they’re never as bad, either. – Alastair Mitchell, co-founder
    16. 16. Questions? Feedback? Hit me up @bandrew