BUSI­NESS LESSONS

Sunday Independent (Ireland) - Business & Appointments - - FRONT PAGE -

One thing is that a higher price can give peo­ple con­fi­dence that it must be a bet­ter prod­uct. You’re of­ten deal­ing with peo­ple in big­ger com­pa­nies who have been tasked to go and find a so­lu­tion. And it’s the com­pany’s money. Some­times you can’t get in there with a low price point We learned that the hard way.

But they will have done it with­out get­ting the hun­dreds of mil­lions in ven­ture cap­i­tal that fore­run­ners such as In­ter­com and Stripe have.

“It’s very im­por­tant to us that we have grown based on not tak­ing in­vest­ment,” says Mackey. “Some­times when we’re in a room with other grow­ing com­pa­nies that are all funded, we do think “Je­sus, what if we took, say, €30m and pumped it into the ma­chine and got re­sults that way? But then we think, hang on, we’re ac­tu­ally prof­itable here. We have a plan. We don’t re­ally need that money right now.”

But aren’t they in a hurry? For all the solid growth and sales suc­cess Mackey and Cop­pinger are en­joy­ing with Team­work now, wouldn’t it be able to scale that bit faster — to catch up with the Zen­desks and the At­las­sians — if they did take that €30m or €50m jet­pack?

“It’s al­ways some­thing we’ll wres­tle with,” says Mackey. “And yes, we’ve done that anal­y­sis. We looked, for ex­am­ple, at the likes of At­las­sian and the in­vest­ment they took and the breaks they made with their com­pany. We might yet look at some­thing like debt as an op­tion as op­posed to giv­ing away a whole chunk of the com­pany, be­cause we could prob­a­bly achieve the same goal that way.

“But we’d be re­luc­tant be­cause the way we’ve got­ten here is a big thing for us and some­thing we’re proud of. Right now, we have a 10-year vi­sion of get­ting to $450m [an­nual rev­enue]. We’re grow­ing at 40pc year-on-year. That has been con­sis­tent in the last few years and it’s all prof­itable growth. We’ve a profit rate of about 30pc to 40pc. But we’re con­stantly rein­vest­ing it back into the busi­ness. If we con­tinue on our plan for 10 years, we will hit $450m.”

Looked at it this way, why would Team­work change its fund­ing phi­los­o­phy?

There may be another rea­son that Mackey and Cop­pinger are re­luc­tant to part with eq­uity. Between them, they only own 80pc. A third share­holder, New Zealand-based Sam Kidd, owns the re­main­ing 20pc.

Kidd worked with Mackey and Cop­pinger on their Cork-based con­sul­tancy firm, Dig­i­tal Crew, from 2007. He had joined the duo to help deal with some of the work they were get­ting from customers.

Soon af­ter, Team­work emerged as a prod­uct to help with some of the ser­vices that the con­sul­tancy was of­fer­ing. As Kidd had eq­uity in Dig­i­tal Crew, he also owned part of the shiny new prod­uct emerg­ing from that.

While re­tain­ing this eq­uity, Kidd now works in New Zealand where he has a le­gal soft­ware startup.

Even though there ap­pears to be no ran­cour over the split eq­uity, Mackey says that it’s some­thing that he and Cop­pinger have “learned” from.

Other lessons the com­pany quickly learned was that pric­ing is a nom­i­na­tive dis­ci­pline in the world of on­line soft­ware.

“We learned this the hard way,” says Mackey, when I put it to him that com­pa­nies some­times take a ven­dor more se­ri­ously if they add a zero on to their ask­ing price.

“Ab­so­lutely. We found it made some of the big­ger clients feel se­cure, that a higher price can give peo­ple con­fi­dence that it must be a bet­ter prod­uct. Now to be fair, you add on things like ded­i­cated ac­count man­agers, en­crypted data­bases and things like that. But what you have to un­der­stand is that you’re of­ten deal­ing with peo­ple in big­ger com­pa­nies who have been tasked to go and find a so­lu­tion. And it’s the com­pany’s money. When Dis­ney came to us, they wanted an enterprise of­fer­ing. All we had at the time was a max­i­mum of $250 per month. When they went back to their man­agers and told them it was $250 in­stead of thou­sands of dol­lars, we weren’t taken se­ri­ously. You can’t get in there with a low price point. With Dis­ney, we got our first $100,000 per year deal re­cently. That was based on a per-seat price, which in­flu­enced it. Be­fore that, our soft­ware-as-a-ser­vice model was hard to an­chor so we changed all our pric­ing to be per seat.”

So far, it’s busi­nesses that come to Team­work look­ing for their prod­uct rather than Mackey and Cop­pinger having to go and pitch to big com­pa­nies. This is one of the side-ef­fects of ‘soft­ware as a ser­vice’, Mackey says. It’s also one of the rea­sons that the com­pany doesn’t feel the need to open up any kind of ma­jor of­fice in the US, where most of its customers are.

“It’s not needed at all,” he says. “Even with our customers be­ing pre­dom­i­nantly lo­cated in North Amer­ica, we have no phys­i­cal pres­ence there. We have a sup­port team that works ‘24 five’. If we ever put boots on the ground to re­ally tar­get enterprise, we would have to open an of­fice. But it wouldn’t be any­where near Sil­i­con Val­ley. In my view, we’d look at some­where like Bos­ton be­cause it’s closer to here. Sil­i­con Val­ley is never a goal for us. There’s no need for us to be there.”

The open­ing of the Belfast of­fice is a new step for Team­work be­cause it’s the first time, Mackey says, that it will have a proper team out­side Cork.

“Be­fore we’d have three- or four-man teams work­ing on it in Buenos Aires or Barcelona. With Belfast, this is our first time where we have a new team build­ing a core prod­uct.”

Mackey and Cop­pinger ap­pear to know what they want. They also ap­pear to have the money to fin­ish the job them­selves.

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.