With all the current pessimism lingering in sudden diminished market values of technology companies globally, it is obvious that the good old days of ‘burning cash’ to underpin growth of the business are no longer acceptable to shareholders and investors alike. Every day reveals another technology company cutting and shedding staff to re-align costs to earnings so that burn rates are diminished and profitability is the new ‘holy grail.’ How quick will you achieve profitability and can you sustain it moving forward? The multiples increase dramatically using the age old metric of profitability.
This does not quite align for traditional early stage start-ups who need initial funding to develop and then commercialise their product or solution offering. It certainly helps if there is a large recognisable market to address, and then the key is to scale appropriately in order to gain market share quickly. ‘Appropriately’ being the key word.
Human capital is certainly a major investment by any early stage start-up and in many cases can also have severe financial burden if it underperforms. Poaching an expensive sales professional from a large enterprise organisation is unlikely to yield desired results based on the stability of the brand, ecosystem, large marketing budgets and many lead generation activities funded by the parent.
Kicking off an early stage start-up in a remote part of the world with limited brand recognition, limited funds, no existing client list and early stage product development is even more difficult. This endeavor requires a certain individual with lots of experience, many skills (in order to wear multiple “hats”), persistence, passion and execution to be successful. Not much sleep either!
And for the start-up the less cash you burn, the better. It has always been a personal goal to ‘wash our backs’ as quickly as possible taking into account that many things maybe embryonic and outside your control. So what do you need upfront to make this happen?
As with any business, customers are the fundamental building block for success. By opening a location for Blue Medora in Asia Pacific and Japan, I’ve realized that acquiring ‘lighthouse customers’ is critical to building the brand and becoming recognised as a serious contender in your chosen market.
This credibility will create more demand in your market and allowing for faster scaling of the operation. Stay close to the customer base and invite them to be part of the development cycle – if it makes commercial sense and adds value for them along with wider market acceptance for the portfolio, you should do it! This is a key strength of a start-up as opposed to the more mature players who do not have the flexibility to react to such requests. Blue Medora uses the MVP methodology to quickly create new products that can be tested and aligned to meet client’s needs.
In this instance, VMware Inc. is an initial investor assisting Blue Medora in its Series A funding and transferring intellectual property to Blue Medora for better, faster, and more cost effective delivery of cloud enabled management packs.
The key is that these products will augment the deployment of VMware’s vRealize Operations Management tool (vROps) and strategically, VMware plans to get higher up the stack to the application layer. Blue Medora can assist VMware in achieving their mission by building an international presence, which will assist in the scaling of Blue Medora so we have clear alignment for joint success with VMware.
Working with a big brother also adds another level of credibility to the target market, instilling confidence in the enterprise customer base who are trying to keep the lights on in a more efficient and cost effective manner. Ten years ago with the advent of virtualisation, we spoke about “doing more with less.” Well, nothing has changed other than this mantle has spread from the datacentre infrastructure into the operational and management cycle of these assets.
Success breeds success but don’t underestimate the hard work that underpins such an enviable outcome. As we now look to build a business for Blue Medora across Asia Pacific and Japan, alignment is critical with customers, partners, and management. Another yellow brick road to walk along with many interesting turns, unforeseen roadblocks and experiences to navigate will provide the impetus to the early morning rises and late night panic attacks. You have to have fun.