On Tuesday night we had the pleasure of having Adrian Chamberlain, former CEO of MessageLabs and senior VP of Symantec, as speaker in the Technology Club speaker event series. He shared with us the challenges he faced in scaling up an already successful software company.
MessageLabs was founded by Ben White in 1999 and has always been focused on offering products for protecting from internet threats (e-mail viruses at the beginning, then spam and multi level protection). They used a revolutionary concept for that time; instead of focusing on writing the patch for a specific virus (like all the other anti-virus software) they used a heuristic algorithm (Skeptic) that predicted the level of danger of e-mails. That solution started being a competitive advantage when the number of viruses coming from the internet grew exponentially. In that moment was no longer possible to create and distribute the patches in a timely manner, and MessageLabs grew and became one of the most successful companies in the internet protection sector.
Seven years later, in 2006, it was still successful; however it was facing some problems of profitability (-£10m of margin) based on the fact that they were not being able to transform a successful small start-up in a large software company. At that point two people were crucial for the company: Ben White, the founder, which was brave enough to step back and choose someone external to be the next CEO and of course Adrian Chamberlain, which in 3 years was able to turnaround the company (from £-10m to £+15m) and led the selling process to Symantec.
- Be brave enough to go against industry common practice. When he joined Symantec the common business model in the software industry was selling the product with a license, then releasing a new version after some time and trying to sell the upgrade to the client. Having a background different from software (construction, telecommunications, retail) for him was easy to see the potential of another business model: selling and distributing the software as a service directly (not through business partners). Saas (Software As A Service) is a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over a network, typically the Internet. The client pays an annual fee and become much more loyal and keen to contribute in improving the next releases.
- Recognize the limits of the entrepreneurs. Entrepreneurs, especially in the technology sector, are good at having ideas and starting a company, however they are not always good at scaling up and managing the company. The impact of
- A fantastic technology without a good marketing & sales department will not be successful. In the technology field the common feeling is that the hardest part is having a revolutionary technology, once you have it you are going to dominate the market. This is wrong, a good marketing is a key factor to understand your customer needs in terms of distribution model and product features. If you have a breakthrough technology but, for example, you do not distribute the product in the right way (license vs SaaS) or to the right clients (large enterprises vs SME) you will never be successful.