Raising a Series A: What I Learned

You may have heard we just announced a $5 million Series A round of financing. We started raising this round and talking to investors in late fall of last year.

As you can probably imagine, going through this process involves taking a step back from the day-to-day work and looking at our overall strategy and evolution. Fundraising forces you to come up with a coherent way to explain your business model to someone unfamiliar with the concept. You have to show what sparked your idea, articulate what problem you are solving, demonstrate progress, such as genuine market adoption, and present your longer term vision.

Given that we just closed the round, it seems like a good opportunity to reflect on BetterCloud’s story so far, as well as give some insight into how we plan to use the investment and what we learned throughout the entire process.

Where We Came From

BetterCloud was founded in November 2011 with a very specific idea in mind. The original vision was to build an array of discrete products that would cover the needs of both Google Apps end users and administrators – security software, management tools, contact sharing, even a product exclusively for email signatures.

But after speaking with some of our earliest supporters, it became very obvious that we had the wrong idea. The last thing Google Apps administrators wanted or needed was a dozen separate applications to manage various parts of the Google Apps suite. Most administrators told us that they would prefer to invest their team’s time, energy and money into one all-encompassing application. They felt, correctly, that everyone could be trained on one interface and, from there, responsibilities could be delegated to the appropriate team members. Even from a mental standpoint, it would be far easier to keep track of just the one application.

So we scrapped the multiple products concept and decided to focus on building a single management and security platform that would cover the entire Google Apps suite. We would still build all of the same features and capabilities, but in one product, instead of many. Enter FlashPanel.

We launched FlashPanel in the Google Apps Marketplace on July 17th and since then (less than 6 months), it’s been installed on over 15,000 Google Apps domains with over 5.5 million users in 114 countries.

Lesson Learned: Redefining our initial concept wasn’t easy (we had to retire some products, websites and brands), but in the end listening to our supporters was the right move. I learned that having an open mind is important and flexibility pays off in the end. Avoid tunnel vision.

Building the Best Product Possible

Our team believes that when it comes to an enterprise cloud management tool like FlashPanel, our customer (the Google Apps Administrator) knows best. We’ve made a point since the beginning to seek out customer feedback aggressively, and incorporate that feedback into our product. Alone, I’ve probably talked to 200 customers and our CTO has probably spoken with 100 more. My conversations are about listening to the customer – what are his or her pain points, ideas and feedback when it comes to FlashPanel and Google Apps. And every time we plan a development sprint, we look at the notes from these calls to make sure we’re building features that truly fit our customers’ needs.

I need to say THANK YOU to every single one of our customers who has helped us throughout the process of building FlashPanel. Our success is due in large part to the interactions we’ve had with you and the feedback and support you’ve provided through UX testing, phone calls, hangouts, webinars, emails and Marketplace reviews.

It’s been great to actually help companies, large and small, embrace Google Apps and all it has to offer – cost savings, productivity, collaboration. When I hear about companies that are able to move from Microsoft Office to Google Drive thanks to the security tools in FlashPanel, I know we’re doing our job correctly.

BetterCloud’s own infrastructure is 100% web with the help of Google Apps, Chromebooks, Google App Engine and 12-15 other cloud applications, and I want our customers to feel comfortable making that same kind of move to the cloud. It may take years for some of the world’s largest companies to make that kind of leap, but our tools will help. And we’re going to continue to listen closely to our customers in 2013. If you’d like to participate in product reviews or feedback calls, please let us know by completing this form or email me at dave@bettercloud.com.

Lesson Learned: Getting honest feedback from customers is invaluable, but customers won’t necessarily line up at your door to give it to you. Being open and transparent about things like our roadmap for FlashPanel helps tremendously. I learned this the hard way at a previous company where we rarely sought out customer feedback, and as a result built a number of features into our product that customers didn’t use. Figure out what you need to do to get real opinions from customers.

Where We’re Headed

Of course, raising any sort of money comes with responsibility and expectations. We’ve had a great first year, but we can’t slow down now. This year, we plan to expand FlashPanel to cover even more of Google Apps and the Google Enterprise Cloud in general, including Google Calendar, Google Sites and mobile devices.

We’ll also be delving deeper into some of FlashPanel’s most used features like reporting, Google Drive tools, Apps Butler, email settings and training. And this spring, we plan to roll out extensive UI changes to give our users an even better experience inside the application.

We’ll also focus closely on partner relationships. Based on our findings, almost 80% of all Google Apps enterprise customers engage a reseller to deploy Google Apps and manage the suite on an ongoing basis – it’s clear these resellers play a vital part in the Google Apps ecosystem. We’re thrilled to count several top resellers as partners and look forward to bringing our current partners and the entire reseller community more value this year.

Over the next few months we’ll also expand our engineering team to ensure we keep up the rapid pace of development and will be building out sales, marketing and support efforts. In fact, two new customer advocates joined BetterCloud this week.

Lesson Learned: No matter how quickly we move, we’ll never be able to deliver every feature that our customers request. But by focusing on a specific space (which to some may seem too niche), in this case Google Apps, we’re able to fully embed ourselves in the community. Especially as a small company, this strategy makes us a whole lot more effective in the long run.

Investment

Over the period of 3 months, I traveled all over the country and had the opportunity to have strategic conversations with some of the most successful investors in the world. Some told me that Google Apps as a platform was never going to reach critical mass, some didn’t know what Google Apps was and some thought it was the apps on an Android phone. At the beginning it was a little frustrating, but then I found investors that really “got it.”

There are a handful of investors that have actually been looking at this space for the last couple of years and completely understand the shift that is occurring (Google has a great long term play with Google Apps) and the value that our product delivers to an enterprise.

At the end, there was a clear synergy with three firms: Flybridge Capital Partners, Greycroft Partners and TriBeCa Venture Partners. Every person that I’ve interacted with at all three firms has been knowledgeable, professional and genuinely excited about what we’re doing. It was a perfect mix of location, understanding of the space, belief in the vision and, honestly, personal chemistry.

Lesson Learned: It’s all about the personal chemistry – you want to work with people you like, respect and trust. If you’re lucky enough to find those people, then you should do what you need to make the deal happen.

The last year has been amazing, we’ve put together an incredible team from top to bottom and we look forward to doing all we can to bring our customers and reseller partners the best cloud management and security tool on the market. For more information on our news, you can check out the full press release here. And for a look ahead at what we have in store for FlashPanel in 2013, please join us for FlashPanel Live Thursday, January 24 at 1:00 PM ET.
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9 comments » Write a comment

  1. Congratulations David and the Flashpanel team!

    We’re closely looking at you and your product and we’re delighted to read this great post.
    Keep up the good work!

  2. Dave – great post! You are doing amazing things. I fully enjoyed your reflections on lessons learned from the capital raise, and I look forward to greater success in 2013!

    Jake

  3. This explains the price increases. Investors demanding it ….
    I don’t use the Flash Panel enough to make it worth a significant percentage of the annual cost of the service. And when we signed up it was free.

    Its a tool used to administer a service. – Here is a bad analogy:
    Im not willing to pay 20% of the cost of my car for a specialized lug wrench to remove the tire … the one that comes with the car isnt as easy to use but …….

    I asked how Sherpas makes money before we signed up, and was told that they get a discount on the licenses and that was enough revenue.
    This a quote from an email of what I was sold when we signed up:
    “As a value added reseller Cloud Sherpas provides Google Apps for the same price of $50/user/year with the following added benefits:
    Flash Panel
    Bulk File Uploader
    Admin Support
    Boost Google Apps Training Trial
    Monthly Onboarding Training Webinars
    Quarterly “Keeping up with the Cloud” Webinars”

    While the pricing discussion seems to be all over the place.
    Looks initial promises were short lived.

    • Doug-
      I’m very sorry that you don’t feel like this is fair. I just want to clarify that we are not Cloud Sherpas and you did not purchase your Google Apps licenses from us, we are not a Google Apps reseller. We work with a number of partners who are trained on FlashPanel and offer it to their customers as part of the $50 per user/year license fee. Our plan has always been to introduce paid plans, but we wanted to get the product to a point where we felt like it was worth paying for. We’ve tried to be as clear as possible, from the first day you install FlashPanel to the pricing page on our website, that at some point, we will introduce paid plans. With that being said, we will always have a free plan available to customers, just with less features.
      Thank you for your comment, feel free to email me at dave@bettercloud.com if you’d like to discuss further or feel that this is not a fair explanation.
      David

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