[updated to get the count right]
Thats how long the day job has been in business. Our 10 year anniversary is 1-August.
I started this business 10 years ago, in part to scratch an itch, but really because I believed strongly in the HPC market. I still do, though our view of the market has evolved, and we look on how its been evolving with mixtures of joy and trepidation.
Trepidation in part because we’ve been pretty good at predicting what comes next, and sadly not been able to raise the capital needed to build in that area (at least previously). I read a blog entry recently pointed to on Hacker News, where the person discussed not blogging about VCs. For years I’ve tried to contain my thoughts in a hermetically sealed area away from the blog, but his points are simply too good to ignore.
Up until 2004 I thought it was because they didn’t understand the ideas when they were fresh. But then they did a couple of rounds of investments, first in RSS startups and then in podcasting startups, that convinced me that it’s personal. They don’t mind trying to make money from my work, but they don’t want to bet on me personally. Okay, so why should I be careful with their feelings? No reason to.
Yeah, that about sums it up. During our 10 years, we’ve given presentations to VCs that, a few months later, called by another to help with some due diligence, we saw a few of our slides. Yeah.
Stuff like that isn’t fatal. Its damned aggravating, and caused me to form … how shall I put this … a less than positive mental image … of VCs. Reading Georges van Hoegaerden’s articles at his company’s site had lent support to some of my greatest concerns.
VC’s largely have ignored HPC in recent years, with a few exceptions. And they caused implosion of one of the more promising companies (SiCortex) by playing games over subsequent rounds.
So we’ve grown our company over 10 years, organically. Which means 10 years of blood, sweat, tears, and risk. Not to mention the huge pay cut I took to start and run this place.
I needed to do this. Back when I was at SGI, before this, I complained, bitterly in some cases, on sgi.bad-attitude (internal SGI news group) that I thought that the SGI management wasn’t pulling as hard for success as we were in the field.
Since I’ve left, they’ve had 2 bankruptcies, a myriad of CEOs, including one whom should never have been a CEO. They were sold for $15M to Rackable which renamed itself SGI.
I had to prove I could do a better job than the old management.
I think its safe to say now … Quod erat demonstrandum.
That itch has been scratched. That item on my bucket list now has a check mark.
You see, surviving the first year, with no help, is hard. Very very hard. It requires cunning, guile, adaptability, willingness to take risks.
As someone pointed out to me, the problem isn’t getting the first customer. We did that within 15 days of starting. The problem is the 2nd, and 3rd….
We had our second by 30 days, and are well past our hundreth customer now.
And if you can survive that first year you have more culling to deal with.
While this link is based on some data that might have large error bars in it, we go from a 20% failure rate down to a 7% failure rate at year 5. Other data suggests that the numbers might be different than this. So if you are there either you are smart, adaptable, or lucky. Never mind people who tell you, you’ve had help. They don’t have the slightest clue as to what they are talking about. They haven’t been there. They haven’t taken the risks with your family’s livelihood you’ve taken. They haven’t navigated the difficult economic cycle waters that show up with about a 4-5 year interval.
So now you’re 5. Half or more of you have gone belly up. Getting to 7 is good. Getting to 10 is even better. Now the failure rates flatten out.
Getting to that point takes tenacity, determination, drive, adaptability, smarts, luck, customers.
Those who claim “a helping hand” contributes really don’t get it.
Business ain’t easy. Its a contact sport.
Starting a business takes an acceptance of risk, as you expect a reward for the risk, if you are successful. Risk comes in many forms and in many flavors. You can control and manage some of the risk externally, and you have to live with some externally imposed risk.
Crappy and onerous terms and conditions massively magnify risk. If you offer your products with your terms and conditions, your pricing is a function of those T&C. You understand and accept those risks. If your customer demands that their T&C be used (many do request, some demand it), you have to analyze their T&C and determine the increase in risk to you. We’ve found, in a number of cases, that the risk to accept externally generated onerous T&C was simply too high. We’ve walked away from some very risky business as we could not account for the increased risk to us by increasing our price to pay for that risk.
This is done all the time in market. When a customer with a good credit rating asks for a loan, they get a lower interest rate than a customer with a bad credit rating. This is entirely due to the risk associated with dealing with the customer with the bad credit rating, and the possibility of default. You can hedge against this, but that still increases your costs. Which you have to pass along to your customers. Which many don’t like.
We’ve managed to remain in business in part by not swallowing these huge steaming piles of risk. You’d be surprised at how many billion dollar corporations are really … REALLY … bad at paying their bills.
External risk … can’t do much to manage it. If it gets too high, you simply don’t start your business. Or if you’ve started it, you close it down because you cannot afford the risk anymore.
This chart shows what’s happened to new entities. We started in 2002, 1-August. About the middle of the chart. The downturn started in 2006, and like the downturn in 2000, there was an economic impact in startups from it. But … there must be some other source of risk, because the number of new businesses has plummeted. This is looking a great deal like a cliff that we fell off. Yet, these are the engines we need to be jumpstarting to get people working in this country.
Or maybe this is the result of those “helping hands” the president talked about.
All in all, I am happy to note we are going to hit our 10 year mark.
So we can write wonderful platitudes about this. High minded posts about entrepreneurism, and all that.
But this would minimize the reality that we’ve fought for every parcel of land, dodged bullets, adapted (rapidly) to market changes, dealt with competitors and partners (with some partners knifing us in the proverbial back).
Getting to 10 hasn’t been easy, and some might point out that its still 15 days away.
I’ve seen other bright people start up similar businesses and fail. Others less bright, but with more luck, succeed. Luck matters. Sometimes you get lucky, sometimes not.
But getting to 10 is more than just luck. There’s got to be something else to it.
Some would argue “helping hands” but, as noted before, this simply isn’t reality, and is more of a failed narrative from a failed source.
So as I survey what we’ve accomplished, what we’ve won, what we’ve lost … the hard choices we’ve made, the luck we’ve had …
… I realize that there are no guarantees in life or in business. We’ve taken (sometimes) huge risks. And sometimes we’ve gotten nice payoff from that risk. Sometimes not.
Business and success are impermanent … ephemeral even. As with evolution, you have pressures. You adapt to changes, or you die.
I’ve heard in my time so far that large businesses are safer for investing in the sort of things people invest in (on the IT side) because of their alleged permanence. Sure. Lets ask customers how their Sun gear is fairing. Or (pick any of the myriad of large businesses that went belly up) gear.
I remember speaking with someone from a business school who had these marvelous little anecdotes … case studies really … about what went on in business. It was cute … really. Such long analysis. Such incorrect conclusions. Business school doesn’t prep you for this. I’ve hinted at it before, but let me be blunt. Until you’ve been bloodied by this this battle, you have really no basis for discussion. You learn to shed your (often extremely) naive worldviews and opinions in favor of reality you experience. Or you go out of business. Its very different experiencing meeting a payroll than it is going into theoretical discussions of how to be successful in business. This area, and actual armed conflict are, dare I say, quite similar in this regard. All the training in the world won’t matter if you don’t keep your head about you, and focus upon reality, not what you think it should be. So if I appeal to authorities here, and you don’t like it, my apologies, but its really the case that unless you’ve lived it, you don’t get it.
For the first 7 years of our existence, we lived with a political administration that was at least friendly towards business. This was good, lowered external risks. For the last 3 years, we’ve lived with a political administration that is overtly hostile to business of all size. They’ve signed legislation that has increased uncertainty in multiple areas, has been and will be increasing our costs for health care. Increasing uncertainty in our ability to get lines of credit (due to Dodd-Frank, and its impact upon large lenders). Increasing taxes on “the rich” will drain needed growth capital away from us. And so on.
We will continue to fight at every step, for every scrap of market share we can. We’ll continue to push the boundaries of performance and scalability. But I can’t control external risk, I can only try to manage it.
I want us to get to 20 years, 30 years, etc. Maybe sell the company to another entity before then. I’m fine with this, if it allows us to keep pushing the pedal to the metal.
But understand, its not easy. No one helps us. We get lucky, and we’re adaptable and smart. So if we’re out of business then chances are that our luck ran out, or we got hit with something that kills businesses, or drains needed capital away.
But we are gonna try, and we are gonna fight, and we are gonna adapt.
We’re going to hit 10 years. This is not a Pyrrhic victory. We’re alive, and growing.
Business is a contact sport. We’ve been playing for 10 years. Like Clint Eastwood said, its halftime, and we are wondering what we are going to do.
And, we have a plan, based upon our experience, based upon our time in the market. And we have products, some announced, some hinted at. That will address a number of issues we’ve seen arise. Things that range from straight forward concepts through radical rethinking of things. Some of these are game changing. For our customers.
We are adapting, and growing stronger. And we are going to come roaring across the 10 year mark, ready for battle.
Or die trying to take the next hill. No one is going to help us. We got here ourselves. As often as not, with a strong, often vicious headwind. And many things and people arrayed against us. With only our brains, our tenacity, or testicular fortitude, and sheer luck to see us through.
15 days and counting.
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