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Scaling a Cloud-Based Disaster Recovery Business in Silicon Valley: Axcient CEO Justin Moore (Part 7)

Sramana Mitra: You had $6 million in funding. What happens next?

Justin Moore: The 2008 financial meltdown happened a week later.

Sramana Mitra: But your money was in the bank before the financial meltdown.

Justin Moore: One week before—September 8, I believe. About a week later, you had the financial meltdown. You can imagine trying to recruit people into a three or four-person startup when you’ve got no experience in storage enterprise infrastructure. Enterprise is not hot at all. No one was interested in enterprise in 2008. It was all about consumer and eyeballs. >>>

Scaling a Cloud-Based Disaster Recovery Business in Silicon Valley: Axcient CEO Justin Moore (Part 6)

Sramana Mitra: Can you walk us through the progression of how many partners you had in year one and so on. How did that number ramp up?

Justin Moore: I couldn’t tell you what the actual numbers were, but it grew rapidly and exponentially. We went from signing two partners a month in the first year to probably 20 partners a month in year three. Eventually, we got to the point where we had over a thousand service provider partners.

Sramana Mitra: What was the incentive structure? What was your pricing model? >>>

Scaling a Cloud-Based Disaster Recovery Business in Silicon Valley: Axcient CEO Justin Moore (Part 5)

Sramana Mitra: Where were you positioning this? Was this for small businesses? Was this for mid-sized businesses? Where was the sweet spot?

Justin Moore: In the early days, the sweet spot was sub-20-employee companies. We had this concept of trying to empower small businesses to run with the resilience of an enterprise. How do we empower the little guys to have the same level of IT confidence as the big guys?

Sramana Mitra: What was the customer acquisition strategy to get to these sub-20 customers?

Justin Moore: First, it was direct. Then we realized that it was going to be far too expensive. As we approached small businesses directly, we found out that a lot of them were working with Managed Service Providers. These are outsourced IT professionals who are effectively the IT department for small companies that can’t afford to have a dedicated IT team. >>>

Scaling a Cloud-Based Disaster Recovery Business in Silicon Valley: Axcient CEO Justin Moore (Part 4)

Sramana Mitra: We’re now in 2006?

Justin Moore: Yes.

Sramana Mitra: What did you do next?

Justin Moore: We started thinking conceptually about Ancient in 2006 and started investing seriously in 2007 and all of 2008. I took a bit of time quite frankly. I moved from the Peninsula up to San Francisco. I was a city boy. Then I was in the Peninsula, just working all the time. I moved to the city and got back to things I was interested in. >>>

Scaling a Cloud-Based Disaster Recovery Business in Silicon Valley: Axcient CEO Justin Moore (Part 3)

Sramana Mitra: You bootstrapped?

Justin Moore: Yes, we convinced the original equipment manufacturers to give us engineers. The logic I used with them was, “You’re not going to get your maintenance renewals on the equipment that you sold. That’s some of your highest margins. If we can get this deployed and get your full renewal and maintenance contracts, that’s meaningful money for you.

There are two choices. You can either work with me by giving me some of your engineers and some of your network architects, or given that I have exclusive rights, I can just start taking out advertisements in the New York Times or Wall Street Journal and flood the market with a billion to a billion and half of un-deployed infrastructure.” Of course, they didn’t want that to happen. We bootstrapped because we didn’t even have to pay the 20 contractors and consultants that we had. >>>

Scaling a Cloud-Based Disaster Recovery Business in Silicon Valley: Axcient CEO Justin Moore (Part 2)

Sramana Mitra: How long did you persist in your first effort?

Justin Moore: It was probably about a year and a half. While I was at school, it started consuming more and more of my time. Instead of doing homework, I was working on a company. That was when I decided to stop.

Sramana Mitra: You returned to Stanford in 2005?

Justin Moore: No, that would have been 2001.

Sramana Mitra: How long did you continue at Stanford before reengaging with entrepreneurship? >>>

Scaling a Cloud-Based Disaster Recovery Business in Silicon Valley: Axcient CEO Justin Moore (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page.

Justin tried his hand in other businesses and never had the time to go back and finish his degree at Stanford. He learnt business on the job. Today, he has a thriving Disaster Recovery Cloud venture, for which he has raised over $60 million. The company has not IPO’d or exited yet. Instead, it is moving upmarket from its SME customer roots.

Sramana Mitra: Let’s start at the very beginning of your story. Where are you from? Where were you born and raised? What is your backstory?

Justin Moore: I was born and raised in Manhattan. I moved to London when I was in my early to mid teens and then came out to California for college. >>>

Winning Against Heavily-Funded Competitors: Al Lalani, CEO of Social Annex (Part 5)

Sramana Mitra: You managed to get to $5 million in what time frame?

Al Lalani: We’re past that stage now, but it took us about two to three years.

Sramana Mitra: Who else in the competitive landscape was really giving you a hard time in deals in particular?

Al Lalani: We were getting hit by the individual vertical competitors. In the loyalty space, there were three of them. In the referrals space, there were two or three that we normally compete against. The market is still frothy but it’s starting to taper off. I believe in the next 12 to 18 months, most of these will really taper off because they haven’t been able to sustain what they raised. Our value proposition was the platform perspective. That’s the thing we’ve built that’s going to take us over time. >>>