The API economy is poised to become one of the fundamental building blocks of any organization going through a digital transformation initiative.
As John Rethans, Global digital transformation strategist at Apigee (acquired by Google in 2016) writes, “digital transformation and platform and ecosystem strategies are part of a shift from supply-side thinking (in which a finite supply of goods and services was viewed as the dominant economic factor) to demand-side thinking (in which demand can be amassed behind infinitely scalable digital assets, then leveraged).”
Rethans notes that APIs become critical by virtue of the fact they provide more points of leverage to allow for more rapid adaptation to change.
APIs are the driving force behind successful digital transformations. They’re enabling growing
The rise of the API economy
APIs are the public portals developers use to access data from external services. It’s how different websites and apps interlink behind the scenes, allowing you to get a ride from Uber when you talk to Siri or share a photo to Twitter when you post it on Instagram, for example.
APIs are also being used for enterprise software.
As digital transformation takes hold, APIs are rising to prominence as a driving force of the trend because data needs to be able to flow between different services. If everything is siloed, insights are limited. It’s only when platforms interlink that their true value becomes apparent.
The API economy is not new, but as more companies invest in technology underpinnings, and think about data portability, its importance grows.
Companies such as Slack, for example, have taken off in the enterprise in large part because it embraced the API economy.
In the case of Slack, the wealth of third-party integrations available allows companies to use the messaging app as a hub for their business. Slack’s API works with virtually all other enterprise tech solutions, turning the barebones chat app into the centre of an organization’s digital collaboration.
By opening up data pools and encouraging collaboration, businesses and services can grow without the need to write code from scratch. Companies such as WhatsApp, Pinterest and Uber have exploded because of their decision to embrace the API economy.
The API challenges
While it may sound easy to simply an an API to any business process or product, there are many challenges that come with it.
One such challenge is culture: Business professionals who don’t have experience in digital-only or digital-heavy environments may struggle to view an API as an asset. The value in offering public access to a carefully curated data pool could be overlooked or misinterpreted if value creation is not understood, particularly as APIs are always-on and can’t readily be disabled.
Companies also have to actively maintain their APIs and security risks need to be addressed. An API has to be updated to match platform changes, and documentation must be published to help third-party firms utilize the resource. Keeping a large-scale API online with proper documentation is not a trivial pursuit.
The results can be worth it though. A MuleSoft study in 2016 found one-third of large organizations with more than 100,000 employees generate $10 million in annual revenue from APIs. Uptake is growing, with 35 percent of organizations who don’t already have an API intending to implement one.
Furthermore, companies that are looking at API interoperability are likely to see a return on investment by combining data pools from various sources.
#ScaleStrategy Q&A: Managing the Growth Bandwidth
Tech veteran Dean Hopkins on what it takes to scaleup — and down — in both startups and enterprise organizations
#ScaleStrategy is produced by DX Journal and OneEleven. This editorial series delivers insights, advice, and practical recommendations to innovative and disruptive entrepreneurs and intrapreneurs. Read the first part of the interview with Dean Hopkins here.
While working at McKinsey in the 1990s, tech veteran Dean Hopkins first stepped into the world of the internet.
“This was 1993. No internet existed as we know it,” says Hopkins, now the Chief Growth Officer at OneEleven, recalling how he discovered the work of Marc Andreessen. “At that point in time, he was demonstrating his early browser concept and talking about how the future of the internet was going to be huge. I caught the bug and decided I would leave McKinsey and start my first company called Cyberplex.”
After a bit of a bumpy start, Cyberplex scaled quickly. “Cyberplex tripled every year and grew to 500 people with $50 million in revenue and $975 million market cap,” he says.
Then 2001 hit. “That was the peak of the cycle followed by a trough. It was the biggest learning experience of my career. I had to descale the company to survive,” he says. Over seven quarters, Hopkins took the team from 500 to 50 and brought the company back to profitability. He then transitioned Cyberplex to new leadership and moved on to his next challenge.
For the next 12 years, Hopkins worked as a management consultant with his own boutique firm that was focused on driving global transformation initiatives for companies such as Thomson Reuters and the Ontario Teachers’ Pension Plan Board.
With both entrepreneurial and intrapreneurial expertise, Hopkins is now applying his global growth skills to transform OneEleven’s unique scaleup model into a worldwide Scale-as-a-Service model.
We recently spoke to Hopkins about tough lessons he learned at Cyberplex, how enterprise growth is different than startup growth, and how he’s applying these lessons to expanding the OneEleven model globally.
DX Journal: When you think back to your time when Cyberplex hit its inflection point, what did you learn about scaling?
Dean Hopkins: Culture and people were the two things that allowed us to handle both the steep trajectory both up and down. Those things got us through the crazy knee in the curve and probably more importantly, helped us when we needed to descale.
Attracting amazing people that became my partners in growth was the reason we were able to scale. I couldn’t have done it alone.
Secondly, we built a culture that was accustomed to scaling and had an appetite for growth. Our culture was about resilience, and scaling, and picking yourself up and dusting yourself off. We made it okay to make mistakes, then march on.
DX Journal: Why people and culture? Why isn’t it all of the other things?
Hopkins: It’s a great question. In a culture where the decision-making takes a long, protracted time, where risk-taking isn’t there, and where people have to analyze things to death before they can make a decision, scaling is impossible. People would crumble under the weight of scale because the number of things coming at them.
To scale, it’s important to trust that people are all working toward the same goals and are empowered to make decisions.
That’s where culture comes in. It becomes a culture that can tolerate the bandwidth of needs that come with growth. If I didn’t have both of those things — good people ready to make decisions and a culture where I allow them to do it — I would have failed to scale.
The other things like technology, offices, infrastructure, are secondary when you distill it down. Companies that are successful across different geographies, industries, offices, become that way through empowering their people and building a culture that tolerates growth.
DX Journal: When you moved out of Cyberplex and into Thomson Reuters and you were managing a large-scale transformation. How did you manage scale within an environment as big and complex as Thomson Reuters?
Hopkins: The first thing I noticed was pace slowed down dramatically. What used to take me a week or a month now took 6 to 8 or 12 months. Large organizations only have the capacity for so much change. Once I did get the ship to turn in a new direction, I moved a lot of people, revenue, cost, and dollars. I had to be patient enough to let it take hold. The experience was much more of a marathon where I had to think multiple chess moves ahead and let the game play out.
DX Journal: How do you know when to modify your approach or give up when dealing with transformation in a large organization?
Hopkins: I didn’t do a great job of it at the beginning. I pushed an entrepreneurial agenda at an entrepreneurial pace, and very quickly ran headlong into blockers. I had to adapt and use an experimentation model. I tried different levels of throttle until I got to a point where the organization was willing to accept it. I learned to read the frustration on peoples’ faces saying “okay, no more, Dean. I can’t take any more of this” and built relationships with people where they were able to tell me that.
I was able to adapt and adjust my own style to better reflect the environment. Then over 12 years, I gradually increased the tolerance for risk-taking and for change within the organization. I would work with specific people to help them increase their ability to drive change. What was first gear early on, became second and third gear closer to the end of my tenure. Ultimately, the organization became much more comfortable with making change at a higher rate.
DX Journal: What’s a scale lesson you learned the hard way?
Hopkins: I learned to hire slowly and fire quickly based on fit. One rotten apple really can spoil the bunch. As part of this, I learned to listen very closely to my people. The people on my team knew about someone that didn’t fit long before I did. By listening, and taking quick action, I saw the immediate positive impact on culture.
Finally, I learned the value of getting out of the way. By fully trusting people, providing them good direction and support when needed, it activates them to reach their full potential. All of these were learned through many failed attempts, and I have the scar tissue to prove it.
DX Journal: What signals do you use to know you’re on the right path when you start to scale something and you’re trying to measure if it’s working?
Hopkins: One of the reasons we were able to survive at Cyberplex — both the growth and the decline — is that we had very good leading indicators of the business. We had invested heavily to try and understand what our funnel looked like, what our planned capacity was, and we had the metrics dialed in. Every month and every quarter, we constantly refined our ratios so we had a really good sense of what was coming. When things started falling off the cliff, we trusted our instruments and started acting accordingly.
Read more about Dean Hopkin’s plans for expanding OneEleven globally.
DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.
#ScaleStrategy Q&A: OneEleven’s Chief Growth Officer on Building a Global Scaleup Knowledge Base
Dean Hopkins’ is aiming to build and deploy a Scale-as-a-Service model worldwide
#ScaleStrategy is produced by DX Journal and OneEleven. This editorial series delivers insights, advice, and practical recommendations to innovative and disruptive entrepreneurs and intrapreneurs. Read the second part of the interview with Dean Hopkins here.
“We’re being ambitious. We want to show scaling companies that we can scale, too,” said OneEleven’s Chief Growth Officer, Dean Hopkins, when the Toronto-based scaleup hub announced its plans to expand to Ottawa, Vancouver, London and Berlin in late 2018 and into 2019.
It’s an opportune time to expand globally as a scaleup hub.
According to CB Insights, total annual venture capital global funding “increased nearly 50% in 2017, as over $164B was invested across 11,042 deals. Deal activity was up by 11%, with both deal and dollar figures representing annual highs.”
As for 2018 so far, KPMG’s Venture Pulse Report says “for the fourth consecutive quarter, VC invested has exceeded $45 billion, and in the most recent quarter, just barely fallen shy of $50 billion once more.”
Hopkins is excited to walk the scaleup talk once again.
A tech scene veteran, Hopkins was the CEO & Co-founder of Cyberplex for more than a decade where he grew the organization from a startup to a public company with nearly $1 billion in market capitalization. During his career at Cyberplex, he also successfully managed the company through a major downsizing as the tech bubble collapsed and transitioned it to new leadership where the company enjoyed another round of growth.
Prior to joining OneEleven as Chief Growth Officer, Hopkins ran a boutique management consulting firm he founded in 2006 to drive transformation initiatives on a global basis for clients such as Thomson Reuters and the Ontario Teachers’ Pension Plan Board.
We caught up with Hopkins to talk about scaling lessons, OneEleven’s growth plans and developing the world’s leading source of scaleup knowledge.
DX Journal: You have extensive experience scaling from both an entrepreneurial and intrapreneurial perspective. What are some of the lessons you’ve learned?
Dean Hopkins: First off, it’s all about people. Attracting amazing people that became my partners in growth was the reason we were able to scale. I couldn’t have done it alone. ‘Hire great people and get out of their way’ became my mantra — even to this day.
The second ingredient to scale was culture. We had built a culture that was accustomed to scaling and had an appetite for growth. Our culture was about resilience, and scaling, and picking yourself up and dusting yourself off. We made it okay to make mistakes, then march on.
DX Journal: What have you learned about scaling at OneEleven?
Hopkins: Early on after I joined OneEleven, I sat in on a community lunch with about 300 people from all the member companies. At this lunch, new members are brought up in front of the crowd to say a little about their company. Then 300 people welcome them with cheers — a lot of love goes their way. After that, others come up to talk about their big wins, like raising money, landing a big customer or completing a big launch. And again, 300 people applaud and celebrate them. Well, I remember sitting there thinking, ‘where was this when I was building Cyberplex?’ I was in a hovel by myself toiling away with no community other than people that I would lean on as advisors. I never had the kind of kudos, support, warmth, love, resources that these companies have at OneEleven, and that’s when things clicked for me. This is what community is. A lot of people talk about community, but to actually see it viscerally done, made me realize I needed to recreate it in other geographies.
What we’re trying to do is get a group of companies — all individually pursuing their dreams, but collectively working together — to make sure that each other are successful.
DX Journal: You’re focused taking this OneEleven scaleup initiative global. How do you assess where you need to be?
Hopkins: A big aha moment for me around OneEleven was getting the Startup Genome report. I looked at our success in Toronto and yet our city was number 14 or 15 on their list. I said, ‘wait a minute, OneEleven is working incredibly well in the 15th best market?! What if we took OneEleven and built it out to some of the top 10 markets? That’s what led to the business plan we’re currently executing.
From there, I overlaid our partner Oxford Properties into the mix. As a large global real estate firm, this gave me the first 4 markets to go after — London, Berlin, Boston, Vancouver. We’re studying each market, mapping the ecosystem, understanding who the players are, comparing it to Toronto, figuring out what the differences and similarities are and then plotting our entry. Over the next year, we’ll be in each of those markets.
The approach to entering each of these markets will be subtly different depending on character of the market. We’ve invested a lot in meeting the community, understanding who does what to whom and how we can add value. By the time we launch in those markets, we’ll already have a reputation built up because we’ll have spent some money to support the local ecosystem. We’ll have brought some value to some of the companies there by helping them maybe come to Canada or come to one of our other markets. I view it as kind of putting some karma in the bank before we even launch in each.
DX Journal: When OneEleven enters a geography, what’s the benefit to companies and communities located there?
Hopkins: From our perspective, there are 3 key benefits to having OneEleven in your city.
The first is that we’re building the global knowledge base of scale. Each community we add is bringing a new rich set of perspectives on how to scaleup businesses. We then make that available to everybody in the peer community.
The second benefit is for the companies in each geography is an easier path into other markets through our growing global ecosystem. If a company in Toronto wants to go to London, they can access continental Europe because we have assets and relationships in Berlin.
Lastly, we are building what we call Scale-as-a-Service. This is a set of capabilities — much like you’d find on Amazon but only dedicated to scaling — that help people with the common challenges of scaling. This only gets richer and more pressure-tested the more markets we serve. We’ll have the best set of Scale-as-a-Service capabilities of anybody out there because we’re activating across companies in multiple markets.
DX Journal: Speaking of a scaleup knowledge base, as a company grows are there one or two things that really become important?
Hopkins: Entrepreneurs 100% need to think about getting away from the technical, engineering-focused orientation of their early stages. They should focus their time disproportionately on building their channel to market, building their go-to market, building their customer base, building their way in which revenue is going to come to them. Build protected paths to market that are defendable, because that’s really where the source of competitive advantage is. An entrepreneur could have the best product in the world, but if he or she can’t get it to market the company is dead. The companies that figure out how to build proprietary go-to market or protected go-to market are the ones that end up winning.
The second thing is not to underestimate the complexity of the people equation. Most founders who have reached the scaleup phase realize they need to think about organizational design, career paths for employees and what the organization will look like in 3 years. If they don’t, they will have a churn problem, which is very expensive and disruptive for the business.
The third thing is preparing for the next big round of funding. Generally speaking, people underestimate the amount of relationship building and preparation work needed. It probably takes a year or so to get ready properly. We’re trying to help companies diagnose where they are, how much runway they need and prepare them adequately for the big round, which is another league up from what they’re normally used to.
DX Journal: What books have you read that helped you get through your scaleup journey?
I’m also a big believer in a book called The Alchemist by Paulo Coelho. It’s all about finding personal motivation and that gets you through some very challenging times when you’re leading a company. There’s a book called The Speed of Trust by Steven Covey, which is all about how to engineer trust in your organization, which is essential at this level. Lastly, Crossing the Chasm by Geoffrey A. Moore. A seminal work on how you market and build a go-to market strategy.
DX Journal covers the impact of digital transformation (DX) initiatives worldwide across multiple industries.
Q&A: Paul Teshima, CEO & Co-founder, Nudge.ai, on how to build a sales team that scales
One of the most important — and hardest — aspects of running a scaleup is figuring out how to transition sales from being founder- to team-driven.
One of the most important — and hardest — aspects of running a scaleup is figuring out how to transition sales from being founder- to team-driven. Paul Teshima, CEO and co-founder of Nudge.ai, knows how important it is to growth.
Teshima is a Canadian-born serial entrepreneur who, as part of Eloqua’s executive team, grew that company to more than $100 million in revenue over 13 years before it was acquired by Oracle for US$957 million in 2012.
In 2014, Teshima launched Nudge.ai, a relationship intelligence platform that helps businesses find and build the right relationships to drive revenue. He secured an office in OneEleven and along with his co-founder Steve Woods (also a co-founder at Eloqua), and they have grown the company to 22 employees, landed several major enterprise clients and more than 20,000 B2B users on the platform.
Bilal Khan: How did you manage the transition of startup to scaleup when founders go from being the primary salespeople to building out the sales team?
Paul Teshima: One of the most important aspects of scaleups is figuring out how to transition sales from being a sales team of one as a founder to a sales team. It’s also one of the hardest. Founders often overestimate how much they actually know that no one else knows, decisions that they can make in their brains at the drop of a hat in a deal cycle. It’s really important to try and simplify and understand what could be translated salesperson that they can then repeat over and over again.
I also think that first hire is super critical to be much more of an entrepreneurial sales person. A classic best practice as you continue to scale is hiring them in groups of two so that you can start removing variables because it may not be the right time to transition it you didn’t hire someone with the right skills. That stage is really delicate and you will need to be patient.
Khan: Have you transitioned Nudge.ai into a sales team approach as opposed to the founders?
Teshima: I’d say that we’re still in founders plus a bit of hybrid sales teams. So we’ve got some salespeople working on that delicate transition period now. I can tell you that I’m already overestimating how much I think they know because I know and take it for granted. I mean, of course they don’t know, it’s in my brain still. It’s about being methodical. We just brought someone in to help us really try and simplify the sales process to determine what can be scalable.
Khan: When do you start thinking about finding a seasoned sales leader? Do you immediately find someone who can start building a sales machine or is this further down the road once you hit your stride?
Teshima: It depends on where you are on a revenue curve plus the capital you have and the talent that’s available at the time. There’s definitely an argument that you hire the Director of Sales first that can carry the bag and helps to scale that initial phase. But there’s also an argument about hiring a hands-off VP to go build up the entire team. Both require early evidence of some form of scaling. You have some sort of process that defines how the sales process works today and there’s some of the things that we know in terms of the metrics about it.
Khan: What are some of the key metrics for a sales success that you think are important?
Teshima: There’s obviously the output of generating revenue in the growth program. For us, we’re in a product-led model so it’s a little bit different and a little newer. We look at early stage interest as signing up for a user, finding a cluster of users account — is it qualified product lead? — and then we ask if we can turn that into a trial that converts to a paying customer. We look at those stages which is a little different than the classic B2B funnel.
Khan: In Canada, we talk a lot about whether we have the sales professionals with the deep skill set to be able to scale companies and do B2B sales. Has finding sales talent been a struggle for you?
Teshima: Are there less seasoned salespeople in Canada who have gone from $0 to $100M than in the Valley? Yes. Do we need to solve that problem? Absolutely.
I’ve been lucky that I’ve been part of the business that has gone from $0 to $100M in revenue (Eloqua) and we didn’t have anyone to rely on but ourselves. I think it’s just a matter of going in and doing it. You are seeing lot of seasoned people coming back to Toronto and as that continues to happen you’re going to see those people train others to get to the next scaling point.
[Sales] is really about the discipline of keeping in contact and helping others in your network, knowing that it will pay back over the long term. We did a study where we showed that the average head of sales has a strong network at work that’s three times the size of an sales development rep, which makes sense.
Khan: I wanted to talk about B2B sales cycles. Those are really challenging time frames in cycles to manage when you’re starting a company. How have you hacked in on the early stages of the sales cycle from a simple cash-flow perspective?
Teshima: The hardest part of closing an enterprise deal is first finding it and then getting involved in the sales cycle itself because they’re so inundated with a barrage of outbound outreach from all these customers. The strategy I recommend to scaleups is this: You have to show some pocketed value, lock them in and then go division-to-division quickly. And do it cheaper than a competitor. Try that approach versus just the top down approach right out of the gate.
Khan: Would you do that at the expense of generating any revenue?
Teshima: Enterprises today actually have slush funds to experiment with technology where they didn’t before. It is absolutely true that if they put some skin in the game, you’ll have a more successful pilot. This opportunity allows you to qualify those deals earlier. I think you need to be pretty disciplined about qualifying and if you invest in the cycles and then put a price on it.
Khan: So you’ve landed the customer and they are paying for the product offering. You’re coming to a renewal cycle and they scale back their offer. How do you address a situation like that?
Teshima: We haven’t had that happen at Nudge.ai. If I think back to me earlier days at Eloqua, there were times when customers pulled back. It’s only a death cycle if you don’t learn from it for the other customers that are existing. You should never forget that customers can always come back in and in champions can always move jobs. You always want to do right in those situations because you never know when you’re gonna meet them next in the ecosystem. Maybe they’ll evaluate it differently.
Khan: How do you think through channel partners strategically?
Teshima: In cloud software, it’s more challenging to have channel partners because of the nature of the product. On the technology side, there is probably good synergies. On the service consulting side, I think it’s harder. If you think training your first salesperson is hard, try training channel partners all your stuff, when they have 20 competing things to sell and they’re making a small margin on your product.
You first need to establish that you can direct sell your product in a repeated way before you think about channel partners. You can get lucky and find one strategic one and go big, but more often than not you’re going to find that they’ll get all excited, get trained and they’re not going to sell anything. Even if they do close something, maybe it’s not exactly the right fit. I’d say be careful with channel partners in early stages.
Khan: Are there any books that helped you in your scale journey?
Teshima: I am probably less of a book guy than I should be as a CEO. There are two books, however, that I found helpful:
- Jim Collins’ book “Good to Great”. I especially liked chapter five about managers and this idea that the best managers, CEOs and executives don’t even want the spotlight. They’re much better being extremely streamlined and determinedly humble, inwardly focused on driving change.
- “Switch” by Chip and Dan Heath. One thing that came out of that was this idea of focusing on the bright spot in your startup. As a founder, you’re geared towards focusing on what needs fixing. It’s actually better and more uplifting for the business to focus on the bright spots.
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