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Building a VC-Funded Tech Company from Upstate New York: Sinclair Schuller, CEO of Apprenda (Part 7)

Sramana: Can you talk through your team building process? I’m interested in how you have built your executive team and how your location has influenced that process. 

Sinclair Schuller: We have talked a bit about our location but one thing I want to point out is that we are not bent out of shape when it comes to the location of our team members. One of our VPs, Garry Olah, is in Silicon Valley.

We have focused on building a very experienced management team. Rakesh Malhotra worked for Microsoft for 10 years and is the VP of Product at Apprenda. He ran Microsoft System Center. Kerry Ancheta is my VP of Sales and he is based out of New York City. He was the VP of Enterprise Sales at MySQL. We have focused on finding the best possible executive management team regardless of where they are.

Every entrepreneur needs to step back and recognize where the team gaps are and find great team members to fill those gaps. I think we have done a great job of that as a startup. This is important because we are a premium priced product going after enterprises. That is not an easy lift. >>>

Building a VC-Funded Tech Company from Upstate New York: Sinclair Schuller, CEO of Apprenda (Part 6)

Sramana: What strategies are you working on now?

Sinclair Schuller: One important lesson for any startup is to learn the direct sales model. Once you understand the buying model and the basics of your sales process, then you immediately start to look for leverage. Intuition will lead you to partners or channels that give you much more leverage in your model. That is where we are right now. We are looking to amplify our direct sales with strategic partnerships.

Sramana: What percentage of your business is product versus services?

Sinclair Schuller: Last year it was about 92% product licensing and 8% services. This year it will be 85% licensing and 15% services. >>>

Building a VC-Funded Tech Company from Upstate New York: Sinclair Schuller, CEO of Apprenda (Part 5)

Sramana: I am a big fan of opening companies outside of Silicon Valley. I think there can be some definite advantages. For one, you did not have to fight the talent war that companies in the Valley have to fight.

Sinclair Schuller: After having started a company outside the Valley, I am also a fan of that approach. The only caution I would point out is that you have to be aware of the pitfalls. We were able to get great engineering talent, but we had a difficult time finding people with experience building companies. That is why we opened an office in New York City as part of our strategic growth plan. There are a lot of people there who ran sales and marketing functions for enterprise IT startups there.

Sramana: What were your major milestones after the NEA funding?

Sinclair Schuller: We persevered through a very difficult time for our company. Our strategy to build a beachhead with independent software developers turned out to be a bad beachhead. We went after companies that were making the transition to the software as a service model, and we hoped to license our software to them. We ended up in a scenario where the sales cycle was very long. We would take on an 18-month sales cycle and make $50,000 or $60,000. >>>

Building a VC-Funded Tech Company from Upstate New York: Sinclair Schuller, CEO of Apprenda (Part 4)

Sramana: Would it be fair to say that VCs in your neck of the woods don’t see a lot of fundable deals?

Sinclair Schuller: Deal flow in upstate New York is very shallow. The typical flow for VCs was from New York City. Most of their deals were consumer oriented.

Sramana: In a way, that may have helped you. There was money looking for deals, and you had less competition.

Sinclair Schuller: There was definitely under-leveraged capital sitting on the balance sheet, and they had to do something with it. I think it increases the propensity to invest. >>>

Building a VC-Funded Tech Company from Upstate New York: Sinclair Schuller, CEO of Apprenda (Part 3)

Sramana: You established your company and got it funded in upstate New York. That is not one of the entrepreneurial hubs in the country. Can you describe the environment and what it was like to get a company off the ground in that area?

Sinclair Schuller: It was less challenging than we thought it would be in many regards. In terms of getting the company started, we found that we have a very engineering-centric culture here. There are a lot of computer engineering and computer science graduates. If you look at the density of math and computer science PhD holders in comparison to the average US population, you will find that upstate New York has a rich talent base.

That was surprising to us in a good way. It enabled us to find good, strong software developers to bring onto the team. Our biggest challenge was finding investment opportunities. It’s not a hub, so when you go talk to a VC the first question, they ask is why we are located in upstate New York. They were very unwilling to invest in a company from that location. >>>

Building a VC-Funded Tech Company from Upstate New York: Sinclair Schuller, CEO of Apprenda (Part 2)

Sramana: What did you do after you left Morgan Stanley?

Sinclair Schuller: I went to work for a startup in upstate New York that focused on help desk software. I worked as a Java developer inside of a really small company. At Morgan Stanley I experienced software development in large enterprises, so it was a new experience to work at a firm that small.

Sramana: What time was this?

Sinclair Schuller: I graduated in 2004 and I started Apprenda in 2007. I had about three years of experience in the field as a developer. >>>

Building a VC-Funded Tech Company from Upstate New York: Sinclair Schuller, CEO of Apprenda (Part 1)

Sinclair Schuller is the CEO of Apprenda. With his two co-founders, Schuller has secured $16 million in VC funding to date. Investors include NEA, Ignition Partners, and High Peak Ventures.  Apprenda delivers private and public PaaS to enterprise developers. Sinclair serves on multiple venture networks and speaks nationally on the topics of enterprise IT efficiency, cloud computing, and next generation enterprise architectures. Before Apprenda, Sinclair held positions at Morgan Stanley, Eden Communications, and consulted for the State University of New York’s (SUNY) vast IT systems. Sinclair holds dual bachelor of science degrees from Rensselaer Polytechnic Institute.

Sramana: Sinclair, let’s start with the beginning of your personal story. Where did you grow up?

Sinclair Schuller: I am a first generation American. My father is from Romania and my mother is from Italy. They immigrated to the United States in the late 1970s. My father’s family has a tradition of entrepreneurship. I was born in New York City but was raised in a very rural area in upstate New York. I had 20 people in my high school graduation class.

Growing up in a rural area is a bit different. There was not a lot of science culture to be exposed to. I had to figure things out on my own. My father was very interested in science and had started medical school but was unable to complete it for various reasons. He went on to start several businesses in Manhattan before we moved to upstate New York. >>>

India’s Earliest Product Entrepreneur: FACT CEO Arvind Agarwalla (Part 7)

Sramana: You own the company 100%. How do you incentivize your employees aside from salary? Do you have a private stock option plan?

Arvind Agarwalla: We do not have a stock option plan, and that would not make sense because I really have no intention of exiting the company. Our sales team operates with an excellent commission package. The support teams are also on an incentive program based on top-line targets. The R&D work is different, but they are compensated very well. Everyone in the company is well compensated.

Sramana: You have a very profitable company and can invest in a variety of areas if you want to. What does the future look like from where you sit?

Arvind Agarwalla: We want to be in every country in the world. That is very challenging from a human resources perspective. >>>