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Building Fat Startups: Nasuni CEO Andres Rodriguez (Part 2)

Posted on Saturday, Feb 1st 2014

Sramana Mitra: What were the mechanics of Abuzz? Was it a venture-funded company?

Andres Rodriguez: Yes, it was a classic Series A venture funded company. It was funded by SoftBank, Brad Feld, Solstice Capital, and Flatiron Ventures, which is no longer around. I was very lucky to have good guys. They were especially good with young entrepreneurs. They knew how to work with teams that did not have a lot of experience. They coached young entrepreneurs through the process of building companies very early on.

It was also a great time to build a company. I think we are in a very similar time today where young people’s ideas can get a lot of support and a lot of money behind them to make those ideas happen.

Sramana Mitra: How much money did you raise? It sounds like Abuzz was a three-year process?

Andres Rodriguez: Yes. Abuzz was unique because, at that time, the venture model particularly for young people with no experience, was around the Internet companies. For the first year, we bootstrapped the company because even then, we were not incredible enough. Even though me and my partner were from Sloan and I had a great technical reputation, we were not seen as experienced enough to justify the multi-million dollar investment.

It was very slow. We had a contract with Sony and other large organizations that wanted to create communities around their offerings. It took a year of professional services and technical work until the investors took a look and said, “These guys have some core assets in technology and some great references. We should really see if we could productize the system that they’re building.” Then we got a $5.5 million Series A investment from them.

Sramana Mitra: With the venture funded model, what was the product that you were selling?

Andres Rodriguez: The company name was Abuzz and the product name was Beehive. The whole thing was a play on the collaborative quality of bees. How could you get people to be organized in the same way? It was a system that allowed people to share their interests in say, reading or buying. Then, the system would find other people who were like you and allow them to connect themselves to you, what today is called ‘friending’ or ‘liking’ someone on Facebook. You could vote on whether you like the things other people like.

Sramana Mitra: You were doing a private label social network product for enterprises to build their own social network and it was very early.

Andres Rodriguez: Yes. This is a great lesson for entrepreneurs. At that time, it was called knowledge management and was being sold to big enterprises. As soon as we got the investment, we went from being very daring and on the bleeding edge of the Internet to becoming a traditional company for the enterprise. When The New York Times came knocking on our door and said, “We want your system but we don’t want to deploy for 20,000 users. We want to deploy for 2,000,000 users. Can you do that?” My response at that time was, “We cannot. That’s not what we built. Building that would require us to completely focus all of our resources on doing just that. The only way I’m going to risk doing that is if you buy our company.” Much to my surprise, they showed at our doorstep 48 hours later to buy the company.

It was really an incredible ride because we had no idea. One of my advisors said to me and I agree with him, “As an entrepreneur, you don’t sell your company. Your company gets bought. Your entire focus as an entrepreneur should be on adding value. You should be ready to talk to anyone that may want to buy your company, but you have to concentrate on adding value to the company. If the offer starts at a reasonable point, then you can have a conversation. If it doesn’t, you should go back to work and keep adding value as fast as possible.”

Sramana Mitra: How much did The New York Times offer you?

Andres Rodriguez: They offered us $33 million.

Sramana Mitra: You had only raised one round of financing – the $5.5 million?

Andres Rodriguez: That’s correct. Yes

Sramana Mitra: So that’s your first venture. Good exit. It actually was a very interesting opportunity to become a technical lead at a very exciting place, The New York Times in the late ‘90s. It was an exciting place trying to understand the Internet, right?

Andres Rodriguez: The most exciting place. It was one of the largest media companies in the world and at a time when that industry was about to undergo a huge transition. When I was put in charge, one of the things that I looked out for was at ways to make our infrastructure scale. We’re talking about scale at huge dimensions. We were one of the first organizations to partner with Akamai for the distribution of our website. At that time, it wasn’t clear whether the software systems we had built would scale to the size of the Internet.

Sramana Mitra: A lot of it didn’t, a lot of it was breaking.

Andres Rodriguez: Exactly. We built these web servers. We put load balance in front of them and then built multiple ones. But some events around the world would make our entire site go down because we couldn’t keep up with the load. There was this constant wave and no matter how high we build the barrier, the wave kept coming over the barrier.

When Akamai came to us, they were still an early stage company, but we saw them as an opportunity to outsource the web content distribution. It was solely focused on having a very broad global infrastructure for solving our problem. To transition the whole system out to a service-based system was one of the best decisions we made.

As soon as I did that, we had a huge project inside for digitizing everything. Everything was becoming digital. This is the benefit of having a great vantage point to see what’s happening in the market. I would always say, “It was better to get that job than it was to make the money we made when we sold the company.” It mattered more to my career and future to be in that position in the market than the actual money that came from the transaction.

The next wave that you could see coming from that point of view was the media explosion. Pictures, videos, music, and writing were all going digital. All media organizations were going to need ways to move all that media into giant storage systems. My storage vendors were the classic traditional storage vendors and it would have been too ambitious to hope to outsource entire storage systems as a service because it’s such a big system to outsource. Traditional storage systems were very focused around high performance and reliability, but not scale and durability.

Keeping data around for 30 years and making sure that it’s intact with no backups and tons of scale – that is where I got the idea for my next company. I started a company called Archivas when I left the Times. The premise of that company was basically, “Let’s build cluster storage systems that are designed – again distributed systems – to scale massively. “ With that premise, we started Archivas, which was my next company.

This segment is part 2 in the series : Building Fat Startups: Nasuni CEO Andres Rodriguez
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