SiliconGrassland.com

Well, we’ve worked hard and have pulled off another one. Today we announced that DataSync has finished our first round of investing with $1.2 million in venture capital. Not bad for a company from ’silicon grassland’. To top off our big day, we also announced that we have entered into a strategic partnership with SugarCRM to offer fully supported solutions to small businesses for an attractive price.

Personally, this journey has grown my faith, my drive, and my belief in hard work. Without a solid grounding in my faith I would have bailed out. Building a company like this is tough, and this journey has cemented my belief that God brings us through challenges to grow our faith and make us more effective people.

I would first like to thank the employees, investors, and customers who made this whole thing possible. It’s been challenging to make it this far. We have encountered roadblocks we didn’t even know existed, let alone how to overcome them. But we have. No one has built a business model like ours before. Delivering cloud based, integrated, small business solutions is new. Plain and simple. Furthermore, we’re out here in the midwest, far away from the built-in connections many comparison companies have in Silicon Valley. It’s taken a long time for anyone to give us the time of day outside of the area. So we’ve had to discover our own path. Fortunately, that isolation has broken. People in the valley know who we are. I’ve had the privileged of holding meetings with some of finest executives and journalists in the industry. We have worked very hard to earn that respect – something I count a blessing. We didn’t raise $10 million in startup capital, start with an experienced executive team, or try a slam-dunk business plan. But we’re innovating, and we are conquering obstacles. It’s a really cool feeling.

This blog has been quiet for the past couple of months, and the reason is above. Sometimes it’s a bit maddening running a privately held company because I can’t talk about all the cool stuff we have cooking. But it’s really awesome to be able to come out and talk about things. We’re very excited about the future of this company and the customers we can help. It is very fulfilling to work on a project that is helping people. We are finishing some compelling case studies about real organizations that have been enabled through using DataSync. We are solving real problems and helping customers win with what we’ve worked to hard to create.

This week I realized that I recently hit my 5 year mark working in the technology world. It’s been an interesting 5 years, and a lot have things have changed. Here’s a quick summary of my journey and were I’m at today.

Where I started…

My journey in technology started in high school repairing home PC’s and doing some basic business computer networking. I quickly figured out that communicating with the people I served was very important. Most of the time us techies fix things that no one has problems with, and create issues where they don’t exist.

I later worked at a bank software company for a few months and learned a lot about how software is built. This taught me how important software design and architecture was for the long-term viability of the company. Small changes in design had a major impact on operations down the road. Sadly, this company should have thought more about design. The company went under a year after my internship ended.

My last ‘job’ working with technology was at the K12 Data Center in Madison as an intern. At this job I learned how inefficient the government is. I also learned to dislike Microsoft servers. We rebooted the entire infrastructure every week. You have gotta be kidding me. It was there that I decided I had to do my own thing. I had to innovate, not just turn the inefficient technology crank.

Vetter Solutions

The early days of Vetter Solutions were pretty wild. I didn’t really know what I was doing, but I did what I knew to the best of my ability. The company fixed home PC’s, offered business networking services, and provided web development. Things went well, and I ended up going to Costa Rica for three weeks on company profits. Good times! However the good times ended when I started hiring employees and incurring overhead. The consulting model just doesn’t scale well, and it just about sucked me underwater financially. However I learned a lot about what businesses used computers for, where they fell short, and how the whole thing could be done better. Vetter Solutions existed for 4 years, and provided a great learning experience and jobs for myself and over a dozen others.

Change: The fall of Vetter Solutions, the rise of DataSync

The biggest change I’ve seen is the rise of the Software as a Service software model. In plain English, this model delivers software as a paid for service that you access through your web browser, instead of software you ‘install’ on your machine. It drastically simplifies using and maintaining software for the average person.

Because of this change, I concluded that Vetter Solutions probably wasn’t going to be viable long term. So I   began building a new company (DataSync) that focused on the emerging Software as a Service model. Once the DataSync model became viable (May 2008), I sold the assets of Vetter Solutions to another company and focused my efforts on solving the next problem: clunky technology delivery.

Clunky technology delivery rampant!

Through all these transitions, I noticed how clunky software is. DataSync is working to simplify software, but it’s a tough challenge that’s going to take some time to solve. Software vendors are notoriously out of touch with the real world – the people that use their software. Microsoft has been making ‘bloated’ software for years filled with features no one uses. You have to be a technology maniac to use Linux – which is built for everyone but the user in mind. Apple is the only major software vendor who seems to understand the people who use their software. We’re working hard to make software simple to obtain and use for the average business user. Our efforts so far have been really paying off.

Where I’m at today…

There is still much to be done to make software simple to obtain and use.  However I think DataSync is on the right track. We recently released a new website that hopefully makes the whole idea of software consolidation much more simple. We’re all still gear heads, so it’ll take some time to make our stuff usable to the average person. However we have made some major progress in consolidating and simplifying business software.

Where I’m going…

I think in a year or so we’ll have a product that just about anyone can figure out. In the mean time we’ll add value and simplicity at every step of the way. It’ll be fascinating to see where the industry goes and how we innovate within it. 2009 still has some steam left in it, and I expect to see some real progress before the new year. Stay tuned!

This year’s Open Source Business Conference was the best I’ve seen. Shocking, considering it’s my first one. I was definitely at the bottom of the totem pole in the room – most attendees of this conference are industry leaders. OSBC was run on the highest level I’ve seen at a business conference. Kudos to Matt Asay for putting together some of the smartest minds out there.

OSBC has a CEO track – so I was in my element, soaking it all up. I met some amazing people and gained valuable insight into running DataSync more effectively. Here’s my summary of the event:

• The leaders – Red Hat, Novell, and Sun all had their CEO’s present, and all did a solid job articulating the open source vision and direction. I was most impressed with Red Hat’s new CEO, James Whitehurst, who actually came from Delta Airlines. He has an uncanny understanding of how to monetize open source effectively, while still maintaining a vibrant community.
• Microsoft – I’ve seen this tech giant show up at just about every tech conference I attend, and they always seem grossly misaligned with the idea of open source. This audience was especially hostile. The guy Microsoft had come in (Robert Youngjohns) did a great attempt at embracing the community, but the whole message didn’t make sense. I agree with Matt Asay’s conclusion on the convoluted Microsoft message.
• The sessions – I was very impressed with the sessions I attended. Save for one session, I stayed on the CEO/CMO track. The best sessions I attended were the two CEO panels. I was especially impressed with Mike Olson of Cloudera. Mike was formerly an executive at Oracle and seems to understand how to build software better than just about anyone. He also isn’t afraid to say things how they are. I respect that.
• The message – Everyone talked about the cloud. Everyone. I got sick of hearing it. The main message this year is that the cloud will enable open source to be deployed quickly and inexpensively. I’m sure DataSync will move in that direction as well. The ROI (Return On Investment)/value message also came across strong. With the economy in the dumps, open source is a really attractive option.

Going to OSBC wasn’t free (or cheap!), but it was worth every penny. I gained a ton of knowledge about how the industry works, and how DataSync can compete and win in an industry that commoditizes everything. There’s a massive opportunity for us to make an impact; I’m excited to push forward and continue to create vale in open source software.

Thank you all for your words of encouragement regarding my recent posts about DataSync. In the mist of the thrill of what’s going on, I feel I need to recognize a couple key truths:

1. This happened because of God’s blessing and hard work by a large group of people. It didn’t happen just because of me, but I’m honored to be a part of it all.
2. This is just the beginning, we have a long, difficult road ahead of us.

I firmly believe that this project is working because God’s hand of blessing is on it. At most times it wasn’t deserved. Success is built on so many ‘chance’ encounters that I choose to believe stuff like this isn’t chance. God chooses to give and take away, and in this season he’s blessed our work.

In addition, we got funded because of a team at DataSync that was relentless. The people behind this project believe in it as strongly as I do. They kept hammering on it through the dark times along with me, and I’m grateful for all of their help. Second, our advisory team was instrumental in getting this project moving. Mari Beth Baumberger (Enterprise Institute), Al Kurtenbach (Daktronics), John Hemmingstad (Small Business Development Center), and my entire seed advisory board contributed greatly.

It’s easy to bask in the glow of winning, but that would be very short sighted. A close adviser told me this today: “You’ve graduated, Congratulations! Enjoy the moment… You now have significantly more at stake… it’s time to get serious and lead your team to the next level. Ready?”. I am ready. The rough road has just begun. It’s going to get more challenging for the company in the coming months and years. After all, we’re growing into a shrinking economy. It’s not going to be easy.

However this company is built on the principles of faithful, diligent, and outright hard work. We’re going to be up against great challenges and difficult decisions. We will prevail.

Thanks for sharing the journey with me!

For those of you who are watching the company I run, DataSync, you’re probably aware that we raised our Series A venture funding back in December, 2008. It was quite the journey.

According to a recent article by the Angel Capital Assocation, early stage investing went down in 2008, and will probably drop more in 2009. Because of the recession, angel groups are focused on ensuring existing portfolio companies survive, so they are spending less on new startups. Raising capital wasn’t easy to begin with – fewer than 1 in 100 companies actually acquire venture funding (src: Launch Utah). That number is probably worsening every day.

So how did we do it? The answer, in my opinion, is found in more than one factor:

1. Low capital requirement – It takes a lot less capital and time to get a software company launched, compared to ‘invention’ or research type companies. This put DataSync in a great position to ask for capital now – we didn’t need a lot of dough, have fast growth potential, and an ‘annuity’ type income stream.
2. Product already in marketplace – We already have a significant and growing customer base, so investors have the assurance that our product would actually generate revenue.
3. Product sells well in a bad economy – DataSync offers software that requires very little upfront and recurring cost and has an immediate payoff to our clients. Often our clients save money the first month.
4. Great advice – The Small Business Development Center built out our financials and advised heavily on positioning the deal, the Enterprise Institute worked with our value prop for investors, and RAIN Source Capital helped wrap out the deal with their capital network. Solid, experienced advisers are key to successfully raising angel capital.
5. Unshakable belief in our vision – I believe wholeheartedly in what we’re doing at DataSync: providing businesses with the best software, consolidated it, and delivering it for a competitive price. That’s what we’re all about at DataSync. We live it, we breathe it, we’re going to make it happen. You have to have that level of belief in your vision to fight through obstacles. We have that desire.
6. ‘Hardiness’ and tenacity – Hardiness is a word we use a lot around DataSync – one definition is “capable of surviving unfavorable conditions”. It took us a year and more presentations than I care to remember to raise capital. We knew we could execute on the goals we set, so we kept knocking on doors until we found investors who saw promise in the same mission.

If you’re running a company that’s poised to succeed, but need capital to get there, take heart. A bad economy weeds out bad ideas and people who aren’t as committed as you, giving you a long term competitive advantage. However it’s not going to be easy to get there. Make sure you have a solid idea you can believe in, build a network around you to best position your company, and network around the clock to find investors who believe in your idea. You’re going to have to beat the odds. After all, you’re trying to be the less than 1 in 100 companies who actually gets funding. It’s not supposed to be easy.

I’ve been asked this question a lot recently. Middleware is a notoriously obscure word that gets thrown around in tech circles. However most mere mortals really have no desire to learn what the jargon actually means.

DataSync builds middleware, so it’s important to me that the masses see the light. According to Wikipedia, middleware is “computer software that connects software components or applications”. That’s almost circular logic (software that connects software to software??). This definition confuses me.

Let me make my own attempt: middleware connects the dots between software applications. In other words, middleware is the glue that connects software to other software. Also, the ‘middle’ in middleware means that in some cases it sits between the underlying computer system and user-facing applications.

I’m going to get crucified by many for my definition, but it’s my best attempt at 11pm

Any suggestions on how I could better explain it? Middleware is hugely important to my industry, and I hope to someday explain it easily to just about anyone.

I’m blessed to live in one of most beautiful places in the country. The Dakotas are home to serene prairies, the beautiful black hills, a winding Missouri river, and wide open spaces. We have world class pheasant and big game hunting that draws gaming enthusiasts from around the world.

The world turns slower here – the agriculture lifestyle that the Dakotas are built on stays strong, and farming remains very successful. The bottom line is this: our quality of life is outstanding. I’ve lived here for a dozen or so years, and I’ve grown to love the place.

I also happen to love technology. Many have asked me why I’m not in Silicon Valley. It’s a simple reason: technology thrives where great minds thrive, not just in San Jose. I love Silicon Valley, and I travel there every year. However there is so much untapped potential right here in the Dakotas. DataSync has thrived on amazing people who have either grown up here, or enjoy the lifestyle outside of work that this area offers. We’re a web software company, so working outside the office in beautiful weather is an option for us. Although we’re very driven at DataSync, productivity is enhanced by an active, healthy lifestyle. The uncrowded, open environment of the Dakotas enhances this balanced lifestyle.

The high-tech community here is small, a benefit I’ve grown to appreciate. As I sat at Monk’s with a collection of innovators last week, I again appreciated the small, tight-knit community of people who are passionate about building the future of technology. Competition for great talent is reduced here, so it’s easier to find great people. We live in a small state, so people’s reputation guides hiring decisions. Cost of living is lower, so building a startup is less expensive.

As I look out my window onto the untamed prairie, I’m thankful that I’ve landed in this wild land. Silicon Grassland is a great place to build a company that will change the world in it’s own small way.

Bear Sterns. AIG. Lehman Brothers. Even Goldman Sachs. The list goes on. Large companies are failing or having liquidity problems in droves. The mortgage crisis is impacting every corner of the global business climate. It’s an interesting note that Oracle is boasting record profits despite the tough economic situation. This will not last. Organizations will not put up with being ripped until they can move to something else. Oracle is nearing the end of it’s stranglehold on software. Why? Open source.

So what does this mean for IT budgets? Aggressive cost cutting. Everywhere. Firms are beefing up on cash and cutting expenses in every area, including IT spending. The first thing to go will be expensive software licenses and internal IT budgets. The problem is that CIO’s can’t eliminate software functionality. However they can move quickly to more cost effective solutions. Expensive proprietary licenses can be eliminated and IT staffing can be reduced.

I happen to run an open source/SaaS firm, and we’ve noticed an upswing in interest from a broad swath of businesses. Why the upswing? 3 major reasons:

1. Flexibility – Businesses are tired of getting locked into a feature set.
2. Control – If the vendor or solution doesn’t work, businesses want the assurance they can take their software and data elsewhere.
3. Cost – Our on-demand (SaaS) and on-premise solutions are 50% below market rates for closed-source solutions.

Let me make a bold statement: an economic downturn of this scale has the potential to change not only the financial sector landscape, but also the software development and delivery industry. High-cost proprietary vendors will have an increasingly difficult task of selling value to an increasingly cost-conscious business world. Open source software has the potential to offer robust software, compatibility and interoperability, and a price point that becomes increasingly attractive.

Software as a Service (SaaS) is also a trend that is poised to gain significant traction because of recent events. Organizations are looking to shed overhead and assets in favor of a dynamic model that can scale with their business. Investing in expensive IT equipment like servers, network equipment, and the staff to run it all is a fixed cost. You can’t run servers with no staff. SaaS solves this. Businesses can grow and shrink dynamically and connect IT costs directly to business size and objectives.

In a time where most businesses are taking big hits, I’m very bullish about the open source/SaaS market. I’m watching it on the ground level, and I see the value proposition growing stronger in many hurting industries.

Something great happened today – DimDim 4.0 came out. It’s the WebEx killer, and the guys at DimDim are even bold enough to put “WebEx is history” on their frontpage.

This web conferencing application lives up to expectations, and more. For months I have been playing with WebEx, GoToMeeting, Yugma (ug), and some other apps. I just couldn’t stomach paying a lot of money (WebEx and GoToMeeting) or using a crappy application (Yugma) for doing sales-critical webinars at DataSync. I’ve used DimDim in the past, but it just wasn’t quite there yet. Version 4.0 changes that.

First, the latest version of this app supports Mac desktop sharing, a requirement for me to function. Second, DimDim is now all flash and doesn’t require any client-side java application to function. It’s about time. DimDim supports whiteboard and PDF sharing inline, a really nice feature to get your audience involved on collaborative projects.

Here’s a a partial feature list from DimDim’s site:

• Share & Present Documents (PPT/PDFs)
• Share Mac & PC Desktops
• Share Whiteboards
• Share Mics (Built in VoIP & teleconferencing)
• Share Webcams (Live video & audio)
• 2-Way Video Chat
• Recording and playback of meetings
• Multiple Presenters (Host lets others share)
• Public Chat (Instant Messaging)
• Annotations and Markup tools
• Scheduled Meetings
• eMail & Calendaring (Outlook integration)
• Localization
• CRM integration (SugarCRM)

We’ve already looked at adding this app to DataSync Suite, and it’s looking really promising. I do webinars all the time, and it’s great to finally have an application that is open source, user friendly, and does exactly what it’s designed to do.

In my years dealing with Customer Relationship Management (CRM) software, I’ve learned a lot about two highly connected, yet highly diverse areas of life: business and technology.

Naturally I started on the tech side. I came out of the tech field and viewed CRM primarily as technology geared to solve a set of defined requirements. This made my challenge as a CRM implementor simply to execute on the requirements doc.

One problem: there was never a solid requirements doc. Why? Because businesses don’t have a hardline set of rules for running themselves. It’s true: almost every business gets things done by doing them, not figuring out how they actually do things. Almost every business, including our own, is very dynamic and runs on loosly defined proceses.

However CRM runs totally opposite. CRM, in our case SugarCRM, runs on a hardline set of rules for executing tasks and managing information. CRM itself is designed to guarantee that sales, marketing,  customer services processes are run thoroughly and consistently.

Therein lies the issue. Dynamic businesses need defined processes. I have found that the greatest need today isn’t better CRM software or more of it, but instead a complimentary alignment of both systems. CRM must be designed to be loose enough to fit dynamic business. However it must be defined enough to complete business processes accurately and repeatedly.

In my quest to build great software platforms, I am forced to constantly rethink how software is implemented in businesses today. Often software people and business people think very differently, and translating both languages is always challenging. When I completely figure out how both work I’ll let you know