“We believe in small efficient business, not small profits, and we think that our largest infrastructure cost will be support.”
Welsby
What is the most difficult aspect your company has to deal with when it comes to growth—meeting demand or keeping a lid on costs?
Malone
Software has one unique characteristic that makes it very different to most other products—you produce it once and sell it an infinite number of times, whether it’s downloaded from the Web or delivered on DVD, the packaging is very low cost.
The biggest costs for growth are all bound up in marketing and people—experienced staff who can manage your partner channel internationally are expensive and hard to find. Support personnel to provide rolling help 24 hours a day are also very expensive and a management nightmare.
The problem with growth is it’s almost too easy to meet demand and very difficult and expensive to create and maintain appropriate infrastructure.
The world is a small place now and if you let people down with support or your channel partners lack adequate training and resources, the world will quickly learn of your short comings and demand will drop.
In an ideal world you would have more infrastructure resources than is required to meet demand and then you would have time to keep developing whatever resources are needed to support your growth. The answer to this is always money.
Malone
What do you see as the most critical factors to managing growth?
Welsby
One key is to ensure our DeviceShield software is reliable and does what it is meant to. Another is to build up the sales resources to achieve our goals.
The biggest barriers to growth are fi nding the cash to fund it and attracting the right sales and marketing people.
Welsby
What are the main sources of funding you have utilised to date?
Malone
The company has received its first-round funding in return for 10 percent of the shareholding. We have resisted the temptation to secure second-round investment until we can make some signifi cant progress into the market with the Replica system.
We have partnered with Intersystems and use their Caché database in our Replica system. They have a local office and their support has been unbelievably good. They provide marketing advice and access to their channel partners internationally.
We have presented to very large corporations jointly and their input and professionalism has been enormously helpful. The company has a revenue stream from our other products in the transport and education sectors.
Malone
How did you find investors without losing focus on production?
Welsby
The investment process was a distraction from our sales activities. It was a constant battle to remain focused on building the business while get the deal down.
An important step was to seek advice from people with experience in the investment process. It took months for the investment to happen, so I let our advisors deal with as much of that as possible while I focused on getting the business done.
Welsby
What would you perceive to be the greatest benefits and threats that come from selling down your equity in your company?
Malone
The greatest benefit investment offers is of course money and expertise. Taking a product to an international market is very expensive and this needs to be accomplished quickly. The greatest threat from investment is you may be asked to “sell the farm” to get it and you will probably lose control of the company.
This is not necessarily a bad thing if you can maintain a reasonable shareholding and provided that there is a very professional management team taking over. It will of course mean that when you have a new product idea, you won’t be invited to all of the meetings that are convened to evaluate that product and it probably
won’t go ahead.
Eventually, your company will stop writing software.
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