Rick shares his experiences in building Thingworx – one of the first application platforms for the connected world – from a small team to $112 million exit. When you’re growing a company rapidly what chances and what stays the same?
Rick Bullotta - From Founder to Exit: Building a Successful IoT Company - Thingworx
Lessons Learned From
An IoT Startup
Or, how to lose a lot of hair and sleep in just a few short years
Rick Bullotta, Co-Founder
A little history
My background is primarily in manufacturing and industrial automation
I’m mostly a self-taught developer and a life-long learner
I have been very lucky to be part of some great companies
I have had operations, sales, marketing, and technical roles – very important
Life is an accumulation of knowledge and experiences – get lots of them
I value the importance work/life balance – Slackerpreneuring
What I’m doing today
My “day job” is primarily:
Leading our product and technology strategy in the IoT segment
Supporting corporate development and M&A activities
Working with our key partners
Growing and mentoring the next wave of leaders
LP in Bolt I and Bolt II funds
Investor in startups in Smart Agriculture, HR/Talent Management, others
Mentor for our local IYPT team
Working to expand technology education in local schools
Why start a company in the first place?
What do you want out of it?
Enjoy what you do at work?
Fame and industry visibility?
Solving big problems?
Doing good for the planet?
It’s not going to be easy
Make sure to get a copy of Oh, The Places You’ll Go. You’ll need it.
Not being able to make payroll is a “character building experience”
Get your family comfortable with camping early on
Believe in your mission
Get rid of negative influences immediately
Know when to hold ‘em, know when to fold ‘em
Deciding what’s important and how to
make it happen
Creating real value for your customers – which you will not likely know at the beginning
Build something differentiating, not a “me-too” solution
Big differences between applied technology vs fundamental research
…and researchers versus developers vs entrepreneurs
If it isn’t creating/selling/supporting your product, ignore or outsource it
Early is better than late, but too early can be a huge challenge as well
Staffing your team
Your first 5 hires may well determine the success of your venture
Your co-founders need to bring different skills than you do
Apply the “Kevin Bacon” rule – but only 2 levels deep
William Wrigley was right
Get rid of bad hires fast
Co-location helps a lot, even today
I’m not a believer in starving your key players – each person has different needs
Be generous with equity, but not too generous. Use your head.
Financing your growth
Revenues are usually the best form of financing
Must align with your business goals/metrics
Grow revenues? Logos? Customers? Profits?
Always takes more than you think (R&D vs S&M percentages)
SaaS/subscription models put you in the financing business
Leverage free everything – PR, networking, tools, hosting, space, etc…
Share costs with your channel early on
If you take the lean startup/MVP route, focus on Viable – not Minimum
Building a channel can be far more expensive than building product
The importance of channels
THE IOT IS AN ECOSYSTEM PLAY. Period.
The best product in the world will fail miserably if no one knows about it
50% of a lot is a lot. Share the rewards with your partners.
Working partners COSTS MONEY. All relationships cost time and money.
Partners create excellent exit opportunities, but choose wisely.
Channel partners can give you global reach quickly.
Reward your partners for “big name” wins and success stories (and require it)
Most partnerships are useless.
Your partner strategy will change over time.
Knowing when/how to make your exit
Nothing wrong with building a lifestyle business
The IPO market is alive again, but requires big upside potential
M&A activities (OK, actually, business failure) are the most common exit
Startups have become the innovation engine for establishes companies
Beware the black swan and consider the competitive threats
Know your limitations
Your acquirer won’t value what they bring to the party (GTM, etc.)
Don’t forget the contributions of the people who got you to this point
Get good advice. Good M&A lawyers are usually worth every penny.
What happens after the exit?
Usually it’s just the beginning of a new chapter.
If you’re going to be kept around for a while, make sure it is somewhere you
would want to work.
Take care of your team – they’re a key reason you were successful.
Earnouts are usually pretty sucky, for everyone involved. Usually.
Aim for as much operational autonomy as possible, initially.
Remember that you might be the new shiny object. Exploit it.
Decide what you want next. As early as possible. Be honest.
Create great opportunities for your team.
Where are some hot areas in the IoT?
Security – lots of activity, but tons of work and innovation left to do
Analytics – deep/domain analytics, analytics at the edge, real-time analytics
Wireless – interesting opportunities to drive down cost of wireless comms
Consumer experience – let my grandmother be able to use this stuff
Data Access and Privacy – highly granular data storage and access
Data Commerce – monetizing data ingress, consumption, and insights
Applications – vertical applications/solutions to exploit the IoT