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| About Stephen Pollack |
| Grew from $1.2 million to $16.2 million in revenues in 3 years (1,243% growth) ----- PlateSpin provides the most advanced data center automation software designed to optimize the use of server resources across the enterprise to improve business service levels and lower costs. PlateSpin’s patent-pending conversion and optimization technology liberates software from hardware platforms, allowing servers to be streamed over the enterprise network from any source to any destination. This freedom of movement ensures the best fit between server resource supply and application workload demands. |
Recent Article:
Prove that what you have is sellable and ask for the right amount of money
- For more on Stephen Pollack visit www.platespin.com
We started PlateSpin in March of 2003. We were in the systems management business and saw an opportunity in an emerging market – virtualization. We thought we could accelerate bringing virtualization into the data center and tackle the initial challenges on a small, start-up basis. Our strategy was to build something that was simple to describe to the market and could be delivered as a single purpose product that solved a real problem. As we ventured down that path we saw that the best way to reach the data center was through partnerships. We reached out to our partners through a product that was very easy to sell. Our first customers actually came to us through the marketing that our partners did for us or through standard web searching and marketing. Most of our first customers found us – we did not have to go out to find them.
Advice for entrepreneurs - Prove that what you have is sellable. You have to pick something you can develop on a small budget and sell in a reasonable amount of time. It can take years to build a broad product and then more time to sell it. If you are looking to raise capital, that is a hard pitch to sell investors on. Find a product that you can bring to market quickly and start earning revenues with to prove yourself. Do not get distracted by your vision. When you find the first product that has legs in the market, start selling aggressively to establish the initial customer base. There are some companies that do not take that approach, take too much time to come to market, and they end up missing their window of opportunity. Especially today, where there is not as much money available as in the 1990s and the pace of change is accelerating, you have to pitch investors on a project that will bring in revenues quickly.
Ask for the right amount of money. I had some prior working experience with investors and they knew what my background and track record was. They knew that I could produce results and deliver on my commitments. We did not ask for a lot of money, though. We asked for just enough to get us through the first nine months and then our projected cash flows would generate enough to sustain and grow our business with minimal additional investments.
Market your business online. We have used the web very efficiently to promote PlateSpin. We do web seminars regularly and have focused on search engine optimization for Google so that our site can be reached properly. It is a cost effective way to market your business and if you do not have a lot of seed money you still have a chance to compete without costly sales.
Find staff through personal networking. Most of our staff has come through networking opportunities. It can be hard to recruit quality staff to a start-up operation. Our staff needed to know that we knew what we were doing and that we were backed properly in order to refer their colleagues. We had revenue early, we had lots of name-brand customers, and we had credible investors who had a desire to support the company. Showing this to our prospective staff made them want to sign up and join PlateSpin. Most people do not have true successes in their background – make your vision appealing.
Have the right sized team at the start. When I started PlateSpin there were 10 of us. I was the founder and I brought in eight developers and one business person. The starting group took a little less money from a salary point of view in the first year and everyone was a share holder to give them the incentive to perform.
Set expectations with your investors. Venture capitalists in Canada are more conservative than in the United States and want to see that you are making progress quickly before they offer you additional funding to expand. If you can present a credible and demonstrable path to future success you can earn their confidence and trust. The best advice of all is to set your expectations with the investors at something that is achievable. If you hit the milestones you originally set out it will be far easier to attract a second round of investment and fulfill your vision.
Think outside the box to attract employees. Things like industry awards do not provide an ability to sell products but they can be used to sway prospective employees. Employees want to work for a company that is going somewhere. The office environment, culture, dress code, and word of mouth are also great ways to bring in new employees. We do a lot of referral hiring. We are a downtown office so we have to cater a little differently to our staff compared to other areas of the city. We have a fitness facility now, provide snacks, and try to do the little things that can make a difference. We have now grown to 175 people.
Do not think in isolation. It is important to get a good sounding board for your ideas before you launch. Just because you get an investor, it does not mean that you have a good idea. There is nothing worse than convincing a venture capitalist to give you money and then you end up sitting on a failure. I have done a lot of work in product development, management and marketing so in my case I did not need advice in these areas so instead focused on others. As you grow a business you will also need more sophisticated advisors who can help you get through the next stages of growth.
Mistakes to avoid? - Choose your investors well. It is important to pick someone who will do more than just give you money. They should understand their role as an investor and stand behind that role properly. You should also consider what you want from an investor. For example, do you want them to be silent or active? I have learned a lot over the past few years about how important it is to find the right investors. For our first funding we used Canadian venture capitalists so there were limits on how they could help us. For the second round we went to the United States and they were able to offer us a different set of benefits. Now as we grow we are looking at alternate funding options to continue our growth. Use your investors for as long as they can help you. If you are going to be successful the Board of Directors also plays an important role and you need people who can provide insightful governance.
Get the right people at the right time. I have found that you grow out of what people can contribute and need to recognize the limitations of the people you have with you. We have certainly grown out of some of our suppliers. For example, we moved our offices because the people managing our facility could not deal with someone like us. We needed someone who knew high tech and could help build a data center. On the business partner side, if you have resellers you need someone who can sell what you are building. Your products might change in a way that your current resellers are no longer appropriate and you need to change.
If you were starting in a different industry? - I would look at something related to the kids generation. They are growing up with computers more and more and it is distracting their progress as individuals. What are the types of websites that kids could go to that maintain their integration into society and our culture. How do we avoid turning the computer generation into an anti-social destructive generation? What are some of the community websites that foster communication and allow them to create communities for themselves and adults? Websites like Facebook and other social networking might be a great start – what could be created to make it even more valuable and useful? I would work on solving these needs so that the generation that follow us are not lost in cyberspace.
Prove that what you have is sellable and ask for the right amount of money - To learn more about this author, visit Stephen Pollack's Website.
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Well written, covering most of the salient points. A bit more needed on choosing the right initial team...as this is perhaps the biggest key- the first 5-10 employee/owners can make or break the best of companies.
richarddgary
Commented on Prove that what you have is sellable and ask for the right amount of money. |
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