Harvard Innovation Lab: Turning Products Into Companies
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John McEleney, former CEO of SolidWorks, discusses how the 3D design company became a market leader. He reviews how it is easy to start a company but hard to build a business, offering an instructive view of the approaches he took that led to his success and the company’s ultimate acquisition by Dassault Systems.
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Harvard Innovation Lab: Turning Products Into Companies
- 1. Harvard innovation lab : Michael J Skok : Startup Secrets : Company Formation Hi 1 #innovationlab @mjskok #startupsecrets www.mjskok.com MICHAEL J SKOK Hi Harvard innovation lab Turning Products into Companies By Design & Architecture twitter: @mjskok mjskok.com North Bridge Venture Partners STARTUP SECRETS Case Example: John McEleney Former CEO of SolidWorks
- 2. Harvard innovation lab : Michael J Skok : Startup Secrets : Company Formation Hi 2 #innovationlab @mjskok #startupsecrets www.mjskok.com For context and more information: • The entire “Turning Products into Companies” presentation can be found here. • For more on the Startup Secrets series, visit www.startupsecrets.com • Related Startup Secrets presentation recommendations: – Building a Compelling Value Proposition – Go To Market Strategies
- 3. Harvard innovation lab : Michael J Skok : Startup Secrets : Company Formation Hi 3 #innovationlab @mjskok #startupsecrets www.mjskok.com John McEleney, CEO Belmont Solutions - Previously CEO SolidWorks - @johnmceleney
- 4. Turning Products Into Companies J. McEleney, CEO Belmont Technology Inc. April 2013 4/1/13BelmontTechnologyConfidential 4
- 5. Background • Former CEO of SolidWorks (2001-2007): • $600M supplier of Windows 3D CAD software • Acquired by Dassault Systemes • Former CEO of CloudSwitch (2009-2012) • Enterprise cloud software • Acquired by Verizon • CEO of Belmont Technology (2012) • $9 M Series A (North Bridge, Commonwealth) • $25 M Series B (NEA) • Based in Cambridge 4/1/13BelmontTechnologyConfidential 5
- 6. 4/1/13BelmontTechnologyConfidential 6 CAD is the Basis of Every Product
- 7. Does anyone know what this is? 4/1/13BelmontTechnologyConfidential 7 1-5-0-3
- 8. Where to sell? 4/1/13BelmontTechnologyConfidential 8 0-3 4-6 11+ 6-10 1-5 1 2 3 # Units # Months
- 9. Why did we care where VARs sold? • Under-capitalized • Need profitable, quick sales • New account penetration was critical to our long term success 4/1/13BelmontTechnologyConfidential 9 + $ - $ Making Money Losing Money
- 10. “1503” = Execution Philosophy • From 1st customer touch -> product delivery: • Minimize friction • High touch, low cost • Broad, stable revenue predictability • Upgrades became an optimization challenge • >500K boxes to be shipped • 15.9 oz vs 16 oz (different UPS pricing schedule) • “Land and Expand” sales strategy for major accounts 4/1/13BelmontTechnologyConfidential 10
- 11. Eco-system “CATCH-22”: 4/1/13BelmontTechnologyConfidential 11 Partners only want your customers, but… You can’t get customers without partners
- 12. So how did we break the cycle? 4/1/13BelmontTechnologyConfidential 12 Marketing Cold Fusion Leaders Set The Pace Followers Will Follow Step # 1 Step # 3Step # 2 Credibility through #’s Get one partner, make them successful The others (including leaders will join)
- 13. Meet your enemy: 4/1/13BelmontTechnologyConfidential 13 1. Events force action 2. The perfect is the enemy of the good
- 14. What you think vs. What you know 4/1/13BelmontTechnologyConfidential 14 Important MORE Important
- 15. Subscription: What price to charge? • Situation: • Competitors charged 18% • Wanted VAR’s to provide end user support • SolidWorks always wanted to take calls->help customers get into production • Action: • Start with the VAR: • How many customers could a support person handle? • How much would they cost? • What % margin does VAR expect? • How do we make sure they call VAR first? • Statistical Process Control • Today this generates $300M (all of the profit of the company) 4/1/13BelmontTechnologyConfidential 15
- 16. Some Other Things I have Learned: • It’s easy to start a company, it’s hard to build a business • Events force actions • The perfect is the enemy of the good • Hiring is the most important thing we do • It should be part of your culture • You are going to make mistakes, fire quickly • Sales people: • Look for the coin slot • Look for people who want recognition • Your job as the CEO: create the culture • Hand written notes – go a lot further than you think • Celebrate victories, anniversaries… • As a leader NEVER take credit, give it to the team • You will get enough, don’t worry • If you’re doing your job, they did the work • Have Fun – it’s the journey NOT just the outcome! 4/1/13BelmontTechnologyConfidential 16
- 18. Harvard innovation lab : Michael J Skok : Startup Secrets : Company Formation Hi 18 #innovationlab @mjskok #startupsecrets www.mjskok.com For context and more information: • The entire “Turning Products into Companies” presentation can be found here. • For more on the Startup Secrets series, visit www.startupsecrets.com • Related Startup Secrets presentation recommendations: – Building a Compelling Value Proposition – Go To Market Strategies
- 19. Harvard innovation lab : Michael J Skok : Startup Secrets : Company Formation Hi 19 #innovationlab @mjskok #startupsecrets www.mjskok.com MICHAEL J SKOK Hi Harvard innovation lab Turning Products into Companies By Design & Architecture twitter: @mjskok mjskok.com North Bridge Venture Partners STARTUP SECRETS Case Example: John McEleney Former CEO of SolidWorks