Sramana Mitra: What are the gating items in providing that connectivity? Is it that the Internet service providers are not moving fast enough? Is there any kind of technology that is unresolved?
Austin McChord: I think there’s just not enough competitive pressure in the market for the quality of Internet service to rise. Lots of these small businesses in the 20 to 200 spot don’t have the availability to bring in direct fiber from a real Internet provider – like Level 3. So instead, when they’re putting together fiber links, they’re limited to what’s being offered by consumer and residential ISPs. There’s not a lot of competition or real pressure to have that quality improved. So that limits businesses’ adoption of the cloud at the lower end.
Andy McLoughlin: We took some angel money quite early on from a guy that I worked for. Charles McGregor had a business called Fibernet in U.K., which he eventually sold to Global Crossing. Bucking the trend in the U.K. where angel investments wasn’t a big thing, he bet his cash on us and that allowed us to accelerate the business. A year after that, we closed our first round of venture funding, which was led by Eden Ventures, which is an early-stage VC fund based in the U.K.
Sramana Mitra: How much was the first round?
Sramana Mitra: I guess the volume of data depends on what industry you’re in and how much data you’re generating?
Austin McChord: Yes, absolutely.
Sramana Mitra: Let’s talk about trends. What trends do you track given what you’re doing? What are you tracking? What do you see as threats and opportunities?
If you are wondering what is happening to enterprise collaboration as cloud, mobile, and social trends converge, this interview is an in-depth study of one of the most exciting startups in the field.
Sramana Mitra: Let’s start with introducing our audience to Huddle. Tell us about you guys. Where do you come from? How did you come together? How did Huddle come about?
Sramana Mitra: Talk to me about the SME market. Help me understand the sweet spots. What are the other characteristics of the sweet spots among your audience?
Austin McChord: We’re selling into the SMB market space. Our sweet spot is the 20 to 200 seat business. They typically have anywhere from half a terabyte to 10 terabytes of critical data. There’s a broad swath of businesses that fit that. It cuts across many verticals – medical, legal, financial, manufacturing, and a lot of creative services companies. In our case, backup is a universal need for businesses.
Jeetu Patel: It’s going to happen. It’s just a matter of how fast and how big. Because everything is getting re-factored to the cloud, the amount of innovation that’s going to happen in analytics and models around security will fundamentally change. Security models are no longer going to just prevent something from happening. Security model is going to be real-time inventing, “When something happens, I will immediately know that this is happening. If there’s a behavior happening outside of the normal pattern, I will make you aware of it.” I think there’s going to be a huge amount of innovation that will go on in that area.
Sramana Mitra: For many generations of technology, security has been interesting as a startup field. Yet again, security is becoming critical because of a whole new scale and a whole new set of architectures developing.
Sramana Mitra: You took the financing from Boston VCs?
Austin McChord: Yes, from General Catalyst up in Boston.
Sramana Mitra: Let’s talk about your business. Tell us what you do. What is the competitive landscape that you play in and how do you differentiate?
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Gartner’s recent report on worldwide IT spending estimates IT spending to grow 3.1% to $3.8 trillion in 2014. Enterprise software is expected to be the strongest growing market with spending projected to increase 6.8% to 320 billion in 2014. It is followed by a 4.5% growth in IT services to $963 billion. Spending on devices is projected to grow 4.3% this year to $697 billion while data center systems are projected to grow 2.6% to $143 billion. Telecom services will be the slowest growth segment with the market growing 1.2% to $1,653 billion.