Some Things Great Software Companies Do That You Don’t Have To | Rob Castaneda, ServiceRocket | BoS USA 2016

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Rob Castaneda, CEO, ServiceRocket

Rob spoke about the three mistakes he made that almost killed his company as he grew it from a bedroom in Sydney, Australia, to an operation in four countries employing over 200 people. He never took funding for ServiceRocket but realised that building a board he was afraid of would be a key part in helping the business grow.

ServiceRocket exists to help software companies ensure that customers use their products, a proven route to ensuring repeat business. He will share some of the mistakes that even the best software businesses make in getting their customers to use the software they’ve purchased. You don’t have to make the same mistakes. Rob will share a few tips you can implement today to ensure your customers are successful, happy users.

Slides, Video & Transcript below

Slides from Rob’s talk here

Video

 

 

The 12th Business of Software Conference USA, October 1st-3rd 2018. Boston, MA.

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Transcript

Rob Castaneda: Thank you! This is forward! Wow! Hello, everybody! Usually it’s empty and I’m asking questions here at the front. So, Ash spoke and Laura totally knocked it out of the park, I went and had the break and just started crying and that was absolutely by the text book.

Can I get a show of hands on who here is an entrepreneur who is building their own business? We’re here! And have not taken any money. So, I’m going to talk about software adoption,  because that’s what I’ve been doing for 15 years and also about my journey along the way – that’s been a fun journey.

Little bit about me, I founded ServiceRocket, actually  it was called CustomWare, back in 2001 and was the founder and CEO and the most popular open-source rock opera of 2016 I was a part of. Okay, there we go! All right, so I grew up in Sydney and I tried to find a picture from the 80s of what Australia looked like and I guess that as it… I was growing up, my first job was in a company called IKEA and it was washing a truck that my dad drove and I then managed to get a job in the warehouse and throwing things on the trolleys for customers.

Who has had a very fun time at IKEA? Yeah? It came full circle because I was always fascinated with the systems, what I learned from there was really the systems, the fonts were very nice at IKEA. I like the ice-creams. But also if you look at the model of how they do furniture and how they dp logistics and compare that with the do-it yourself SaaS business where customers are taking software and deploying it and there are actually a lot of parallels in there.

So one of the largest businesses in the world. I studied at UTS in Sydney. There’s no one here from there. For an internship, I worked in a company called Borland in Sydney and – there’s a few people clapping, it’s still around I think. And during that internship, I got to do some training and support and this is 1997 and on the support desk Delphi is the hip, favourite product of everybody. I’m the new kid on the block and get all the crap they’ve acquired over the years to support, and there’s a big long list of it. Every time a support case came in, I had to find the boxes with the disks, find the operating systems, do the install to answer a question. And then one day mysteriously the CD arrived the US with a thing on it called Latte and none of the Delphi or C++ people wanted it, it landed in my lap and it was a beta version of J Builder in Java and my world was totally opened from there.

So I stayed at Borland for a couple of years in training and support in pre-sales, did a little bit of R&D and I moved across Silicon Valley when I was 20. And the top left, it’s the picture of the rental car that I got on the first day I landed in the US as a 20-year-old. And I did once drive on the wrong side of the road. So anyone here know the bBy area? But back in 2000 it was totally booked out, all the hotels. I was teaching a course in Cupertino in an old Apple building – that came back to Apple. The hotel they put me was on the other side of the Santa Cruz mountains, so I had to go on highway 17 as a 20-year-old driving one of those, on the wrong side of the road.

The other memory I have is I used to go around the country teaching training courses like this five days at a time for BEA systems for Web Methods and all the enterprise Java crowd. So what happened? Those two things happened on the left and I had to go back home. So familiar story. I love that you’re having a baby and being married – makes it all happen right? So, what happened was I called up BEA and Web Methods locally and said I’m a trainer, have you got any work? They said yeah, we have a lot of work. So I started teaching the same courses I had in the US in Australia. And I needed to bill them so I created a company and that’s how I created the company. In Australia, VC I think would stand for Vice-Captain of the cricket team and it was a good cricket team back then. Next slide [laughing] ok.

How I funded the company in 2001

As of today, 20-15 years later our paid-up capital, I stole this from our balance sheet, we put $191.59 into the company so that’s our funding so far. That’s in dollars and cents not millions or thousands. And as we’ve done restructures and things over time we’ve had to put another $100 in, exchange rates have eroded some of our capital.

The other interesting thing is we’re teaching these courses for these large enterprise software companies and over time we had built this Open Source stack of technology to run our project with Bugzilla, with Mantis, with all fancy these things. And on the next block was a company called Atlassian and had this thing called Eros – we were like let’s do that and we met with Mike and Scott and we started using that. Bit by bit we replaced our stack with their products, to the point where they use to send customers across to us to sort out their products. Hey, I need help installing Jura – back in 2003 or 2004. At that stage, our name was CustomWare. So a couple years ago, Chris did a talk about Wistia – I think RG Metrics did a talk as well – about their branding and I’ve got some funny ones here.

We were called CustomWare Asia Pacific because the US company that I worked for when I moved back home to get married was called CustomWare and what better name to call it than that? So we grew up next to Atlassian and an interesting experience is the combination of many things happening. The world is going Cloud, they moreorless have an IKEA model of buy it yourself and take it, the attitude in general was hey if you like it, install it and away you go. If you don’t like it, don’t buy it. Customers were trying to get all this stuff moving and working together. So over that time we’ve grown and I will go into a bit more detail on some of those things and take some questions.

Growing up in the shadows of a Unicorn

It’s been an amazing journey working in the shadows of the giant unicorn at that time, because things move so quick and nobody knows what would happen. In one day we’re in a meeting room and we’re 5 people and they’re 4 people, a year later we’re 12 and they are 10. A year later we might be 20 and they’re 100, and things just explode. And for me along the way we have offices in different countries and the biggest thing I’ve learned is to listen to my voice and create a culture and create a company where my team want to belong. When you’re growing the company in the shadows of another company it’s very hard and you have to remember to take care of your own culture and your own company.

It’s very easy to be hidden behind what’s there and they have an amazing PR machine so there’s a lot of noise going out there and a lot of press and blogs and advertising. So for us it was about defining our culture and rather than thinking about the fun things, the best definition I’ve ever seen is this one, what is the worst behaviour that you’re willing to tolerate as a leader?

The hardest thing to do as a CEO is to fire somebody. So where is that line? So, when everything’s good, culture is great! When that line gets crossed, that’s when your character comes to play and as the CEO most of the time you’re busy doing 3 out of the 25 things that you are supposed to do and most of the time when you have to take action and change things culturally, it’s a distraction to what you want to do. So a very key message for me that one. So looking on some of our branding – I came back to Australia and created this company in 2008 and 2009 we were called CustomWare Asia Pacific, the financial crisis happened and we moved to the US and what a great way to create a US name than to put a CustomWare Asia Pacific and put USA in brackets Inc. No problems for that domain name. [laughter].

So it turns out luckily for me there is a guy in Utah who owns customware.com who registered the name since 1978. I don’t know how he did it but it was there so that gave me an idea to change the company name. He does website design so if anybody needs websites – just saying it’s all there and it’s mobile compatible, I think it works.

So we had this logo and when I engaged someone for this I was like don’t make it blue, just make it look different than anything else. So we came up with green. It became swamp green internally. Here’s a funny one. So back in 2006, we actually wanted to give the company a look and feel, and we had a company generate all of these concepts. So they came in very professionally with these boards and some were the typical buildings shapes, the multi-racial handshakes and there was a theme with cartoons. I grabbed all my competitor logos and put them on each of the designs and I picked the one that looked the worst and that was not the sheep but the cartoon ones, and this was in 2006-2007.

So now it seems everybody has cartoons, right? But the way we did that was to say, how do we create a brand that looks different to all the people we felt we’re competing with? As we moved along my designer had this rocket, because we made an acquisition of one of our platforms and we were going to rename it Service Rockets, so finally something that made sense and we had a .com and he said great, I have this rocket. My previous client didn’t like it, would you like it? So we took it and it was like can we lose the green guy and go from there. So during the transition we were using CustomWare and this, and eventually we did that. One of the things that we were short on budget being bootstrapped so we copied Zen Desk that had these great grey shirts that we love. We put the rocket there and didn’t put the name cause we were going to change it. Some of us have CustomWare on the back of our shirts and the idea of keeping them consistent is that all our social media pictures of the last 6 years all look the same. So we now have this thing where we sponsor kids sports groups we give everyone a t shirt and now everyone wants the shirt so that was a great $9 brand for us to make work.

So as a company I flew around to all our offices during this time of trying to create the culture and define our values. At the moment we’re now at 230 employees, full time, across 4 locations and we have 1 culture for the company. We started in Sydney, we opened up in Kuala Lumpur with 1 person, in a StarBucks. In 2009 I moved my family to Palo Alto and it was just us and we started there and in 2013 we wanted to go 24/7 with people awake so we said Malaysia is working well, let’s find something 12 hours away and that put us either in western Europe or Latin America.

We did the research and over a summer break flew down for 3 months in Chile and decided that was the place to be so we set up there. Importantly, we have one global culture and our teams span and spread all these offices. So it’s been a remarkable experience and something that I really enjoy and it recharges me when I go to a different office. It’s the same culture and family but I get time away from what I was doing, time to connect and reflect but you can see the diversity in the team. Ok, let’s see, culturally I think for us there were some special things that happened, this is our Chilean team in Santiago, that all of a sudden picked a Beatles song and sang it and sent it out to all our offices. We have a competition to either lip-sync or play music.

So services? What the hell? Who loves consulting? There are some consultants here. And so it was always interesting, hey you created a software business or a technology business, andn you do services? What? Anytime I was talking to a VC or somebody as soon as I mentioned we do services, I got to go now. It’s a big dirty word but it would always call to me because my time in Boulder in engineering and sales engineering I could interpret what the techs would say and I could talk to the customers and explain them. There was this bridge saying how can I do that and make things work?

In trying to get software adopted, there is an element of service that is needed, but think of the service as an outcome, not as an army of consultants from a Big 5 consultancy that need to come through – so if you go to our simplest way, all of us have iPhones here and install apps – we have two hats, we’re the end user and the administrator. Because we choose what apps we ask the admin to put on and when we don’t like them we delete them. We’re everything in one and if we make a bad decision we don’t tell everybody. We might say that app is crap, and that’s fine.

So if I was gonna write a mobile app and deploy it to 100k users inside of my retail chain, would I do any kind of planning or training? It might be a cheat-sheet or something really small but there is some element that’s needed to help guide the users to where they need to be. So we have a bank of about 1000 questions depending on what type of software you have and what products you’re trying to do. The things you should think about – so when a previous talk was talking about using the product after launch, that’s the part we focus on. And I encourage you to think about these and think about some of the other questions and metrics and items because it’s not about the customer bought our software and then went away. So in the new world we know that only 1 in 7 software projects are successful, and half of them aren’t that effective. So there’s a lot of software is shelf-ware that we have and there is a lot of software that just sits there idle and doesn’t do anything.

So bringing this back to something we really had to do is we had a problem with Atlassian that a number of customers wanted training and were all in the US and this was in 2004 and we were based in Sydney, Australia. So Scott had said can you just train these guys for us? I said great and back then training was 3-4 days in the classrooms with the beige monitors. So we were thinking about how do we give these customers training and learn what they want to get from it? And there are nuances in this, and so has everyone seen this chart before and read this book before? Yeah? If you haven’t, please do that. The idea here is you need to cross the chasm and I guess if I go back to the Jura case, the geek who is running his own technical development team that downloaded and installed it and sent it out to his group does  not need training or consulting. He’s provided the service work. He or she. What we focused on doing was what I will call the B grade person in that company who says what are you doing? Oh, I’d like to use that as well. And so they ask the alpha geek hey, what are you doing? And what does the alpha geek do? We all know this person, they just avoid them. I’m busy, I’m running my team, you go and figure it out for yourself. So we created training offerings that the alpha geek could refer to the B grader to, go and do the training that’s there! And that was awesome for sales because the orders just came in and the trainers didn’t go in expecting to be bombarded by someone who knew more than them but it was actually somebody who was receptive: I need to learn what this thing is so I can roll it out in my team. And our goal was to try and get up here so your product is easy to install that’s great! You don’t want to train your early adopters because they will train themselves. If you need to train your early adopters, then you have a bigger problem.

So we were analysing the types of people and personas of – it’s the usage persona – of the software. So, if less than half of us are analysing our buying personas, I don’t know how to get metrics on who is analysing user personas, after that, right? And even this is like the same kind of user but at a different stage of their career. We also knew we had this short time frame because what does an alpha geek do every year or every 2 years? Changes technologies or jobs or does something different. I was like, wow, we can get them to spread all these seeds and if we follow through with everything they need to refer to, that’s adoption. This model won’t work for anybody but it’s an example how to think of adoption, not just like here’s some training, go and do it!

So the way to think of it, it’s also a concept in this book, it’s the core product and whole product. And the core product is what comes out of your engineering group and the whole product is everything else what’s needed to make it work as a solution and cross that chasm. For each of us, that will be very different. For some things it’s heavy amounts or support or some kind of hardware, for a lot of us it’s trying to answer some of the questions that the users use some of the features. Some of it may be in product. Some of it may be out of the product even.

We came up with a concept of a 45-minute jam session training course: what can you learn in 1 hour? A little bit? Yeah? What’s the goal of doing a 1-hour overview of Jura in the Atlassian stack? Our goal was, we had the persona of maybe multiple B graders trying to convince their managers that they should use this for their platform. So we made it 40 minutes+questions, so we made it up to an hour, and the whole pitch was grab your teams, some pizza, get them in a room, we’ll cover it all off. And our goal was to get through the senior manager to the approver persona, to get rid of that bit of friction because we know if we get rid of that bit of friction, what does that do for the platform? It spreads it out even further – also when you’re trying to get your product spread in an enterprise, where do they get stuck? That offering actually came from customer feedback.

As an example, we had 1 customer who called us in for a demo and I hate this. Because a customer calls you in and say we want to see this or this, do my job for me, that’s presales. And it very rarely works – so what’s interesting is that a customer going to a training course and hearing from an instructor and not from a pre-sales guy even if it’s the same guy is very different. It’s an official communication and it’s funny, people go to training and they go as students, they go into a pre-sale cycle as the aggressive buyer. So understand some of that.

So the way I think about software adoption is all about kind of ponds. My mom was a gardener and every time we went to the nursery we used to play in the ponds and we used to block the cascade, grab all the plants and block them, empty it out. The way I think about this is the opposite where you let the top cascade fill up and the goal of software is to get rid of the friction – it’s almost like you’re filling a bucket and you go to a bathtub and a swimming pool. You don’t want to have armies of consultants to do all that for customers but identify those different friction points and give the end users the tools to smash them down. If you think about it that way, where is the next bottleneck? And let the organisational momentum push that through for you.

Ok, IBM – everyone seen this before? I think it needs updating. I think nothing happens until someone learns something. Right now we are selling software, people are buying it and they are buying it once they think they’re making an educated decision on that. So the context which you’re using for learning and your products is more important. So training used to be thought of as a post sale item – hey we sell it and those guys there do training or the products are simple, we don’t need training. If you don’t need training, create something for the purchase cycle, for the B and C graders in the organisation. The early adopter won’t do training anyway, they will probably write it for you. But if you think about it, we’re almost reversing the cycle here.

Great learning content also makes great SEO content, it’s high quality content and it’s very hard for your competitors to rip off specific training about your products. So think about those cycles reversed and the more people you educate in the market will become buyers they will work through the funnel and know about your software. When someone looks over their shoulders and say what is that? They can push them to the same training and use it over and over. How many of us offer training support in other people in the organisation and it takes them so long to learn what the hell the product does? You get reuse out of this stuff if you do it right so I’m a big advocate from that.

So we want to turn from spring to waterfall but we want to use gravity to make all that happen. So prior to IPO we handed the department back to Atlassian to run, by that stage we taught 50k students how to use their products. In 2003, who really needs training to log a bug? So, something as simple as that, there are also large enterprise customers that won’t buy products that don’t have training. When you’re dealing with a model where you might want customers to just buy from your website without you having to sell it, you won’t know about that.

Okay, so the other thought here is again why give them fish when you can teach them how to fish? That’s our mind-set as we’re applying to software adoption and so that goes with training, support and some services we do. The way I think about support is it’s in 2 categories, you have a technical bug that’s happened, the rest of it is just training after you need it. Whereas you could have done it beforehand.

So pausing for a second and moving along to a different tangent on what I did as I built the business is that I initially put there that I was lazy, but I like being pushed as much as I can and not leave anything on the table. As I was building the company as an owner, founder, CEO, I think we can have a tendency to kind of get burnt out and what I did was I created a Board. II went out and I sought out great board members who could add value to the business who routinely kick my ass and I genuinely fear when I go to the board meeting. I fear those Board meetings. So I put that out there for those that are self-funded or who may not have had a board member forced upon you. You can go and create your own Board. I have a VC on my board and he gives us the perspective as if we were a funded company and the things we need to look out for. He pushes us as if we were funded but we can take that on and work out how can we adapt it to our business. It gives us insights into what a funded company would be so at the point in time where we may want to make the choice, we already know what happens and we have the Board structure and discipline set up. It takes a long time to build the organisation to be able to create Board packs so just getting the whole team and updates ready on a monthly rhythm makes us a better company and keeps us more aligned. I would hate to do that and introduce a whole new set of Board members but it would be instrumental for us.

Ok, in building multiple offices around the world, I have this test that we do at the end which is a liveable test. We only open up an office in a location where we could live and that’s because as a CEO, wherever you have an office, you may need to be there for an extended amount of time. And so when we were looking for Santiago as an example, I assembled a team, I took 2 people from a Malaysian office and moved them to Santiago in an apartment and their task was can you work effectively from here, 12 hours away from your team and work with US clients in our US office? I found a relatively local entrepreneur from a Latin country and his job was to do the local negotiating and navigating of the government departments and working things out and I went down there with my wife and 3 kids for 3 months. My wife had the task of getting around Santiago with the 3 kids who were 9, 6 and 3, and your job is to just get around the city and feel safe, cause if you don’t feel safe, how can we send our employees there?

At the end of the 3 months we went through all these checks and some of the business items and we were good and we set up in Santiago in 2013. There is a website that we used to help guide the decision and it’s called doingthedecision.org and it ranks every country in the world from the world bank and it ranks them on how easy it is to get electricity, budget, corruption, all the metrics and it’s crazy! We created a short list of that and the second thing is we hate connecting flights so every one of our offices is a direct flight from Sydney. Even though I don’t live there anymore it’s good to know that you don’t need to stop and if you do, you can go to Sydney. So Santiago has a great flight to Sydney.

So both Malaysia and Santiago were successful for us, but they aren’t common locations that you think of for setting up offices. Who else has offices in Santiago and Kuala Lumper? Right? So we specifically chose countries that MBA students wouldn’t pick so MBA would totally go to India, China, Brazil… Why would I go there and be a small minnow in a huge pond with all these multinationals, when I can go somewhere with a 20 million populations and I can get full page newspaper coverage that we’re opening an office? When we opened in Malaysia, we got on TV. Our PR budgets weren’t huge. Think about when we could open up, we could never do that in China – so it’s better to be a bigger fish in a smaller pond for that.

So along the way, we’ve actually built some products so this – I had hair when we started and one of the hardest thing to do for a service company is to build a product, because you’re used to solving problems for everybody. We have a VP of Product who takes a lot of that stress away from me but the way I think about it as well as all the lessons that gone through, my job as CEO is set the destination for where we’re going and align all the customers with that destination.

Our product management team, their goal is to lay the track and the mantra at the moment is the engineering train can’t stop, the thing with trains, they go on tracks, they don’t change directions or stop really well. And this metaphor we’re using it and this is how we think about things so if you want the destination over here, the train isn’t going to go there. It’s been hard for us to build product, right now we do it well. We had a whole series of Open Source components on the Atlassian stack that we commercialised and that’s how we built product and our engineering team and that was a fun experience to go from how do you manage something with 100k downloads and start charging for it? I can tell you that using consultants who are on the bench and have spare time to do engineering is not a good way to do it, I’m sure you know that.

Another saying we have internally is that selling doesn’t always help but helping sells. Our team has a podcast which they’re aligning more customers and people who talk about how do you sell by helping remove friction? So check that out and if you also want to be part of that let us know. And when we look at professional services, if I say that word, consulting, professional services, everyone cringes. The way to think about it in this world is that we wanna be the best pit crew for the drivers. The customer is the best driver.

The most scalable way is to get the customer to be the driver. Don’t be a backseat driver but you wanna make sure that whether it’s through automation through your product or smart services that are scalable in your support team, that you are the best pit crew and are checking in with the customer, changing the tyres, tweaking the aerodynamics and doing the things that you need to do. So a lot of the services and are helping them design these kind of things and roll them out in a scalable manner so one team in support can service 1000s of customers and keep the car moving and optimised. You should be able to check in with your customers on a regular basis. A lot of this goes under probably 1 level deeper than what’s customer success. A lot of customer success is nagging, are you gonna renew? Yes or no. If not I’m going to throw a big flag, panic.  Whereas the approach here is we will tune the car, the driver’s gone? There’s a problem. And if it’s a really important customer, how do you fill in and help them drive a bit or they can get someone driving. We need someone to drive? They don’t have a license. We have driver education here. Let’s get him through to keep it going. These are the types of things that are very hard to do when the customer sends you an email saying we’ve chosen not to renew – at that stage, it’s too late. The race is gone, it’s lost. So think about for your products how do you create such an offering? That’s not intrusive, you find a race car driver, I want the best pit crew, put the customer in the glory, in lights because that’s what they like but don’t be the backseat driver.

Ok, so the other thing we’ve observed working with many different partners in the software companies is to really nurture the partner ecosystem. In previous decades rather than Microsoft and Oracle partnerships, partners are a dime a dozen. Right now, any of your partners can go and create their own software. In 6 months they can get an amazing amount of ARR, I’m so jealous! So the important thing here is to be aware of what’s happening in the market.

So if you have partners you’re working with make sure you nurture them and use their brain cycles and allow them to innovate and win – if you do have partners. So the last thing you want to do is have them and not treat them well.

And finally to wrap up, I think mentorship has been a really big chain or stepping stone or a thing for me and I’ve had a lot mentors in various organisations along the way and in terms of giving back I also mentor a bunch of students and accelerators as well but there’s nothing better than having a bunch of mentors that you work with that can help bounce ideas off you. But also make sure you give back along the way.

There are a lot of businesses and other young people in the world that are building companies that can leverage the knowledge we have. So this young chap was building a nursing business and on one of our events I managed to get on stage with Magic Johnson and he asked him some questions and in front of everybody, he said I will take you on as a mentor and gave him his phone number. So that was one of the great days in my life, nothing to do with my company. So I’d like to thank you and I think we’ve got fifteen – [clapping]

The 12th Business of Software Conference USA, October 1st-3rd 2018. Boston, MA.

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Q&A

Audience Question: Hi! I’m Richard. Thanks for a great talk! I also have a team in South America but it’s in Argentina. You said it’s not uncommon for bootstrap entrepreneurs to burn out and it’s why you wanted to have a Board. Can you speak on that decision and how that helped you not get burned out?

Rob Castaneda: I think – for me, a big part is I don’t know what I don’t know. I went back home to get married and taught a training course and needed to bill someone, that’s how I created the company. And there were times and all of us go through that pendulum of like wow and oh shit! And having a Board and people that have done things before or seen things– my Chairman was a Partner at PWC for 30 years, he’s seen a lot of stuff. When we wanted to flip the company internationally it was great to have that and as a mentor, when I go to Sydney we hike together and chat and have dinner at his house with his family. For me it’s connecting more at that level and that helps me navigate and put things in perspective.

Audience Question: Are you sleeping better now with that Board?

Rob Castaneda: I’m not sleeping but it’s not because of the Board.

Mark Littlewood: What keeps you awake at night?

Rob Castaneda: Everything. I think right now, we had some software adoption business challenges and I’m like wow, how do we go through this? But there are for companies that are extremely huge and so that then becomes a business challenge and we say well, we could do that, we would need 10 times what we have to be able to do that. So there are good things to lose sleep on.

Audience Question: Hey, Rob! Thanks for the talk and for coming! Always good to hear from a professional services owner at Business of Software. As someone who is trying to convert a pro-services to more of a product revenue company, can you talk a bit more about how you’ve productised that pro-services revenue? I think you mentioned some Atlassian customisations and integrations. Could you expand on that?

Rob Castaneda: We probably made 4-5 acquisitions in our time, a lot of them are really small. So in the Atlassian system there were a lot of vendors and add-ons who would get tired and bored and we picked some of these things and some we used a lot so we commercialised them – the only pushback we had was community members who previously get their Atlassian licenses for free and said hey, I don’t pay for Jura, why do I have to pay for this? Ok, we’ll give it to you. And those are doing remarkably well. You have to separate the services team from the engineering team. You have to do that. You can’t have any people who “in my spare time I will…” – there is no spare time. You can’t have spare time ruining the code. I think the biggest thing is doing that, we made a larger acquisition of a learning platform called Learn Doc so we were on the online training for companies like Puppet and Doctor and a bunch of others on this platform. We actually took a bank loan to make that acquisition. I think HSBC funded a bank loan to fund us making an acquisition of software. But what that made us do, was like we just borrowed money to do this, we better put the right resources into it not just spare time – so there’s a mental,  like that story previously, not we’re gonna cut this off. For me, our goal as a company isn’t whether it’s software or services, it’s about the outcome of software adoption so that’s our product to market, is software adoption. We do need some services. We’re at like 50/50 subscription based.

Audience Question: I’m curious how many products are you building and what’s the size of your dev team?

Rob Castaneda: So we have a bunch of add-ons, I think there’s about 8 or 10 and then we have our learning platform. The size of our whole product group is about 50 people out of 230 so it’s quite sizeable. Basically every bit of profit that we’ve made has gone into building this team.

Audience Question: Thanks for a great talk! I was wondering if you could put yourself in your partners shoes. The notion of being able to partner to deliver the services part – How should a product company go about talking or trying to partner in order to provide that service to their customers?

Rob Castaneda: If I am at that stage and we have a couple partners, having been through the experience myself, I think the natural thought is to be like I will have lots of partners so I can choose between them all. When you’re a small company, especially in this market, knowing any one of your partners can become a software company in 6 months, then as I said in the slide, you want to pick them and engage them and allow them to innovate and win- there is a portion of my brain that has to be on new shiny stuff. So what I do is I will break away from the day to day and I will go on and pursue new opportunities that are different because that’s how I function. If I am going to do the same mundane stuff I don’t like doing it. And so some of our partners know that and so they kind of like Rob’s an interesting guy, let’s bring him in and see what he sees, and we’ve done it a couple times when we’ve gone in and found an opportunity that no one could see and they let us run for 1-2 years and then it’s like great, let’s productised it and give it to our partners and run with it. But there has to be a runway for it to make sense for us to want to do it. Depending on the size of that, from my perspective, I would be very selective and know that the people you are with are going to win, and then you know the loyalty is gonna come, the money is flowing. Are they innovating and feeling good? It’s almost like an employee. The opposite is like being an Apple reseller programme, if you were a reseller partner right before the iPhone came out, wouldn’t you think they’re going to have this huge product and the Apple resellers are going to do so well out of it?

Audience Question: Great talk! Quick question – What drove you to have 4 separate offices?

Rob Castaneda: So firstly my father is from El Salvador, my wife from Malta and my wife is from the Philippines. I was born in Australia and we live in California so I think I’m a global citizen. So I don’t see country boundaries. Like even in Australia I wasn’t Australian where I was brought up and when I went to Malta, I couldn’t speak Maltese, so I was a foreigner everywhere. I’m a local in Palo Alto, it’s great! So we initially, Sydney is not a huge place so we needed extra resources and we had a contact in Malaysia so that’s why we set up there. We came to Palo Alto because we ran out of software companies to work for in Sydney. Our offer wasn’t just to consult to big companies, but to partner with software companies. We had this meta model and a lot of software companies were in Palo Alto. I explained to people – if you wanted to be in movies, you’d go to Hollywood, fashion you go to Milan and Paris. So there are centres of gravity, so that was Palo Alto. Chile literally was we wanted to be 24 hours without people carrying pages and crap and let’s take Malaysia and minus 12 hours and find something and that’s what we did.

The 12th Business of Software Conference USA, October 1st-3rd 2018. Boston, MA.

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