Executive Cases: Interviews with Senior Executives of Early-Stage Companies:
LoopUp – UK
Prepared by George Foster and Sandy Plunkett
LoopUp is a business conference calling and online meetings company, headquartered in London with offices in San Francisco, Boston, Hong Kong and Barbados. Founded in 2003 as Ring2 by Steve Flavell and Michael Hughes, the company entered the conferencing market in 2006 and now trades as LoopUp. Flavell and Hughes’ mission was to apply technology in a user-sensitive way to make remote meetings less painful for mainstream business professionals. LoopUp is a cloud product, with supporting mobile apps, offered as a branded software-as-a-service to enterprise customers and as a white-labelled platform-as-a-service to distribution reseller partners. LoopUp works with thousands of enterprises and has distribution partnerships with BT, Cable & Wireless Communications, SmarTone, CSL and 3 Hong Kong.
Q1: What was the source of the initial idea, and how did that idea evolve into a viable, growing company? How did it change over time?
Flavell: “We noticed how most business professionals so blatantly disliked conference calls. From our own personal experience, it was not difficult to see why: issues with dial-in numbers and access codes; not knowing who is on the call and who is speaking; late joiners and missing guests; irritating background noise; the list goes on. We decided to do something about it, by building a conference calling product that people would dislike less. We came up with a no-training-required experience, where the host receives an alert to a smartphone and PC as soon as the first guest joins the call, which takes them to a web or mobile app that shows them who is on the call and puts them in control. It worked; the apps were used on over 60% of calls.
“On the back of this, we extended the approach into web conferencing, trying to attract the 80% of the business world who still default to audio-only calls and ‘e-mailing out the slides’. Once in our web app, we then enticed the host with a ‘big orange button’ to share their screen with guests. Here, again, we were guiding the user towards a simple, clear and useful capability, rather than asking them to find it for themselves or attend training, for which most mainstream business professionals have neither the time nor the inclination. So, LoopUp became a seamless meetings product – combining audio and web – providing a less painful way to meet remotely.”
Q2: What were the major growth accelerators for your company in the early years of high growth?
Hughes: “Remaining true to the mainstream, non-specialist end user was a key growth factor. We worked – and indeed still work – to a key guiding philosophy that can be summed up as ‘ease of use drives use, and use drives revenue’. We only included features that solved core pain points experienced by the majority of users, and eschewed everything else as it can quickly lead to unwanted complexity that gets in the way of ease of use. It was often tempting to add the marginal feature because a specialist user had asked for it, or because the Gartner Magic Quadrant required it as a criterion for inclusion, but we held firm. Otherwise, the product would have become a ‘feature list’, which would have required training and, in turn, would not have inspired mainstream use. By contrast, the result was a simple, no-training experience that was liked and used.
“I would also highlight the call we made to go international early. From day one, we were in both the UK and the US. This was driven partly out of pragmatism, given we found investment and early customers in the UK, while our engineering talent was based in the US. It made management communication more challenging – fortunately, we had a product to deal with that! – but it was a real business accelerator. It was also so important for our early financial and professional services market sweet spot, which was highly transatlantic by nature and which really valued LoopUp’s security of knowing who is on their conference calls.”
Q3: What role did key aspects of the entrepreneurial ecosystem surrounding your company play in the growth of your company?
Flavell: “Over the early years, we received investment from over 40 angels, essentially from a network of former classmates, former colleagues and their colleagues. This led to a wealth of experience and expertise to draw on, as well as referred business opportunities to pursue. One such angel investment led to a business opportunity in Spain, where we had dinner with a former colleague, and several months later led to our venture capital investment in 2006. Another angel and former business school classmate has continued investing throughout our venture capital phase, and remains one of our two major shareholders and a board member.
“The ecosystem also really helped our early-stage people strategy. That started with Michael and me, who met at Stanford business school in the mid-1990s, but continued throughout our early-stage growth. Three years in, over 70% of our team were either friends or former colleagues. There was a strong level of loyalty and trust in the team. That helped us move quickly and navigate uncertainties, and also, I think, shone through as we expanded the team through more conventional recruiting methods and channels.”
Q4: What key aspects of the entrepreneurial ecosystem surrounding your company that were absent (or existed only in a weak form) created the greatest challenges for growing your company? Please describe and discuss how you met/were impacted by these gaps in the ecosystem and their resultant challenges.
Hughes: “We have a great nucleus to our engineering team: team members who have been with us for many years now. However, growing a product development team around them in our San Francisco office has come with challenges. Ironically, the Silicon Valley ecosystem has been as much a hindrance as an enabler in this respect, with its very competitive employment market. Hiring top talent with experience is difficult; even hiring junior talent is expensive.
“We have dealt with the challenge in two ways, both with international components. First, one of our core team has returned to his home country of Indonesia, and we have built an outsourced development strategy around him. He is a critical lynchpin of this remote team to back our core San Francisco development operations, our product and our methods.
“Second, we founded a programme called the ‘Silicon Valley Internship Programme’ (SVIP), which offers UK software engineering graduates a year’s experience in Silicon Valley. Participants work full-time with sponsoring technology companies, with the aim of inspiring them to return to the UK with the skills and confidence to do a start-up or work in an early-stage tech company. LoopUp is one of nine companies that took a total of 15 UK college leavers in the programme’s inaugural year. The support provided by the British Consulate and the British American Business Council to secure J1 visas for the programme participants has also been essential for the viability of the project.”
Q5: At what stage did you invest significant resources seeking to grow your company internationally/beyond your domestic country or region? What factors were pivotal in deciding when to seek growth internationally and where to seek that growth?
Flavell: “We took the unusual step of growing internationally from day one, with operations in both the UK and US. This meant we were effectively working round the clock on initial product development, developing in the US and testing in the UK. The real benefit, though, was that we were better able to win and support international enterprise customers – major conference callers – straight away. This initial UK-US market phase continued through 2009 as we honed the product and, critically, bided our time as we learned the best messaging and processes to sell it ourselves. Direct distribution (field, inside and online) in multiple core country markets remains a key part of our growth strategy.
“However, there was a significant opportunity in markets outside of the UK and US, where conference calling was a more nascent business activity. Penetration in continental Europe was significantly lower than in the UK/US, and in Asia-Pacific was significantly lower still. In 2009, we embarked on a strategy to partner with network operators to distribute our products in international markets. Network operators were increasingly looking for new, adjacent sources of value-added average revenue per user, and we were looking for companies with strong brands and established enterprise customer bases. Our first such partnership was closed with SmarTone in Hong Kong in early 2011, and we have since closed deals with CSL and 3 in Hong Kong, and Cable & Wireless in the Caribbean.
“The next phase of our international development is just around the corner, as we start to work with Alcatel-Lucent to bring our product to a global audience through their extensive channel of approximately 1,500 business partners. This time next year, we expect that our product will be actively marketed in over 20 countries and made available in 15 languages.”
Q6: What were the biggest challenges in building growth internationally? How did you meet or adapt to those challenges?
Flavell: “Focus was a major challenge in our international expansion with network operator reseller partners. During 2009, we swiftly built a sizable pipeline of potential partners, but we were arguably spread too thin geographically at the time, and a number of very promising discussions failed to materialize. We learned the importance of ‘time on the ground’ to get these large deals over the finish line, which led to a change of approach when we tackled the Hong Kong market.
“Another challenge has been the general corporate components of international expansion such as company formation, tax planning and any regulatory compliance requirements. Entering a new geography has proved non-trivial in terms of the various checks and associated actions we have had to undertake, perhaps more so than for many other expanding companies due to the telecoms component of our product. Fortunately, we have an in-house counsel, who has been with us from the start, and who has been invaluable in helping us navigate these challenges.”
Q7: What major role, if any, did key aspects of the ecosystem in the country (or countries) you first sought international growth either promote or impede your ability to grow in those international markets?
Hughes: “The in-country ecosystem actually played a large role in determining which particular country markets we targeted first. Around 2010, it became clear we needed an Asia-Pacific operation to support our increasingly international customer base. Singapore and Hong Kong were prime candidates in terms of regional transport hubs, simplicity of corporate set-up, regulatory clarity and availability of talent. In the end, the decision was made for us by the business development work that we focused on in these two countries. Leveraging introductions from BlackBerry (as part of their ISV Alliance Program), we met all the major mobile network operators in both countries. We concluded a deal in Hong Kong (and have since closed two more). In August 2011, we opened our Hong Kong office to support our new partners and extend 24/7 live operator support to all our enterprise customers and reseller partners worldwide.”
Q8: Seeking international growth often has both high moments and dark (low) moments. Briefly describe one high moment and one dark (low) moment in seeking international growth.
Hughes: “Concluding our global licensing agreement with BT (announced in May 2009) was an important moment. As well as pointing to the differentiated value in our product and technology, this deal signified to the wider business world that our operations were fit for secure scale. I am sure this raised the glass ceiling for the company.
“A dark moment arose just last year, when we realized that our engineering capacity for the subsequent six-month period was almost entirely consumed by partner work. While great from one angle, it meant our having to delay the next phase of core product development. Continued innovation is critical for us and, since then, we have tripled our effective engineering team.
“Highs and lows are undoubtedly part and parcel of early-stage growth; we have had many of each. However, we have built a great team with a clear, common purpose – to make everyday remote meetings a less terrible experience – and this has been key to navigating the course.”