Sramana Mitra: In modernizing the enterprise storage using cloud principles, was there any other competitor or were you the first to come into that space?
Andres Rodriguez: When we came out, we thought we were the first but there are always competitors in the space. We have competitors today.
Sramana Mitra: Big opportunities tend to have competitors and that’s not a bad thing.
Andres Rodriguez: Absolutely. If you’re not chasing an idea that another company is chasing, you should be worried.
Sramana Mitra: Let’s get some specifics here. Who were the investors who invested in Nasuni?
Andres Rodriguez: Nasuni was led by North Bridge Venture Partners and Sigma Partners here in Boston.
Sramana Mitra: Same guys who invested in your previous company?
Andres Rodriguez: Yes, it’s very important to always invest with the same group of people. All venture-backed companies go through tough times like personnel changes, product market issues, and sales issues. You want to know that you understand and trust each other enough to know how you are going to react to those obstacles. It takes a lot of noise out of the system.
I’ve been very lucky in my career as an entrepreneur. I’ve never had a bad investor experience. I’m not one of those guys who tell horror stories about their investors. I’m very picky. I choose people for temperament and I choose investors whose chemistry in the board is going to be good. They balance each other out and I can tell that they’re going to be people that can work together as a team in the interest of the company. If any particular investor isn’t perfect, you need to find a balance of people that balances all those weaknesses. At the end of the day, that is more important than even valuation because nothing will destroy a company faster than a group of people fighting in the boardroom.
Sramana Mitra: Let me synthesize a few things that are question marks in the mind of entrepreneurs who are trying to build businesses. This is a time in the history of entrepreneurship where the pendulum is very much swung in the direction of lean startups. The whole industry is operating with this lean startup principle.
Having said that, there’s a certain class of companies that have become very easy and cheaper to build. Not so much easy to build but has become much cheaper to build and can operate in the lean startup mode. You can go out and build a minimum viable product and get customer traction even before you get financing. Investors are looking for that class of companies. These tend to be software and internet companies. The amount of investment or the number of companies that are getting formed and built in your genre have drastically dropped.
I call these fat startups. These fast startups have become a rarer and less active domain of investment. Part of this is because the industry has matured. A lot of these problems are solved. We are not really operating in the early days of chips and networking. Nonetheless, as you are pointing out, there are still opportunities of building infrastructure. If you want to do a fat startup today, you pretty much have to be a successful serial entrepreneur who can fund a concept based on track record, reasonable representation, and analysis of the market opportunity that investors are going to bet on. You cannot do it as a first time entrepreneur without track record. Is that your observation? Is that an accurate system as far as you’re concerned?
Andres Rodriguez: It depends on the team. I think some things don’t change. One of the things that allowed us to succeed in Abuzz is that we were able to run very lean although we didn’t have the track record. Because we were technical, we could work for free. That allowed us to create enough credibility in the company that the investment followed.
Sramana Mitra: You’re talking about your first company?
Andres Rodriguez: Yes, I think it hasn’t changed today.
Sramana Mitra: This company is very different. You bootstrapped your first company with services and started generating revenues very early on.
Andres Rodriguez: Yes, the revenues were important. We were all working for that company for a fraction of what we could have made in the market given the skills we had.
Sramana Mitra: Anytime anyone chooses to be an entrepreneur, that is true. Nobody as an entrepreneur, to begin with, makes the kind of money they would make in the market.