Reflections of a Successful Exit

Reflections on a Successful Exit A Post-Post-Mortem of the GreenButton Story Written By Dan Khan Image credit: thenextweb.com Earlier this year I met Suse Reynolds and Marcel Van Den Assum from The Angel Association and both asked if I’d spend some time capturing the lessons learned from the GreenButton journey from idea through to exit, an event which was relatively fresh on the startup horizon in New Zealand. I’m no stranger to startups, having built and scaled CEO, Scott Houston’s story, the more I felt the in- a few in my time, as well as seeing one through to sights and lessons of just what it took for them to get acquisition by the largest Internet Service Provider to exit, was a goldmine which could help accelerate in the UK back in 2000. I’ve been in New Zealand other entrepreneurs and early investors alike. now for 10 years, and even today count the number of similar acquisitions in our nascent community on This short-form article sharing a more personalised two hands, so GreenButton’s journey was particu- account of their journey comes off the back of more larly interesting. in-depth and objective research I carried out over the course of this year for the Angel Association of Since designing, leading, and running the first two New Zealand (supported by New Zealand Trade and programme cohorts of startup accelerator Lightning Enterprise). This article gives a brief summary of Lab over the last few years, I’ve been looking at ways some of the key lessons that I personally decided to companies can not only get a leg up starting up and draw out, but I urge readers to also review the in- getting initial seed investment, but critically, what depth work linked below to draw their own insights. happens after that seed funding arrives. My obser- vation of early stage companies over my time in New That deeper case study provides significantly more Zealand tended towards a sluggishness of execution background and input from a wider range of people, and a lack of understanding of the pace that many and details specific decisions made and steps along international counterparts were moving at. There’s their journey. The insights in that work are mani- lots of focus in New Zealand about the startup phase, fold and I hope that entrepreneurs, angel investors, but little, if any, on the endgame and exit. board members, and exit teams can take away sig- nificant inspiration from that document to help craft So the more I heard of GreenButton’s founder and their own companies’ journeys. Download the in-depth case-study: “Anatomy of a Successful Exit: The Green Button Story” 1 Brief Background the people that came with it. Investor David Akers spotted the deal first at a club investment evening, For those that don’t know much of the background, and passed it to friend Marcel Van Den Assum, who GreenButton was founded by Scott Houston after both formed the initial governance team around years building supercomputers for Weta Digital to Scott. help speed up the rendering pipeline of movies that they were working on. Scott noticed that the com- Looking back over the research interviews, the most puter servers, which had to be purchased up front to striking thing about Marcel and the early board is reduce timing and availability risks, were mostly sat how they operated as a ‘Startup SWAT’ team, pulling unused, and saw an opportunity to leverage those in trusted allies, prior co-workers, and team mem- high-spec processors to carry out other work during bers around them to fill out the missing governance this downtime. He later developed these ideas at the and operational roles to help Scott make this venture New Zealand Supercomputer Centre, and eventually a success. From COO Chris Teeling, CFO Darryl saw the opportunity to productise this on-demand Lundy, and CTO Dave Fellows, suddenly Scott had processor power to form GreenButton. a strong experienced management team around him that knew how to execute, and much of this value Scott’s real vision with GreenButton, spurred on by came from the connections and network that early friend Mark Thomas of Right Hemisphere, was to investors brought. export processor-intensive jobs into the cloud with the simplicity of pressing a big ‘green button’ inside Perhaps the biggest insight for me in listening to the app, and returning processed results much faster how the board operated within the team, was their than they could be processed in-house. From here commitment to supporting Scott to be personally the idea for GreenButton was born, which really was successful (albeit with the resolve to have the hard ahead of it’s time in a world where ‘the cloud’ and conversation if performance didn’t stack up), possi- ‘infrastructure-as-a-service’ as we know them today bly even more so than Scott realised. The heart of didn’t exist. any leader is best summarised by the desire to create future leaders from the people they work with, and Scott self-financed early iterations of the product, this rings true in the belief and commitment Mar- giving up the already achieved Kiwi dream by selling cel and the board had in Scott throughout the com- his boat and rental properties to see out his vision. pany’s life, often changing the strategy to fit with his After gaining confidence in the idea, but no invest- personal and emotional journey to make him suc- ment, by pitching the idea to strategic partners, he cessful. ultimately pitched the early concept to Wellington angel club AngelHQ. A particular point from that early journey that reso- nates with me is the ability to “pitch above your ca- pability, but execute within it”. This takes strength Investment Into Making the of character of the CEO and early investors in an in- Entrepreneur Successful dustry where venture capitalists are all too eager to replace the founder or CEO with a more operational Up to this point, Scott was a solo-founder and had one to maximise their chances of creating the next driven the idea alone to realize the vision, build the billion dollar company for selfish gain. early product, and get it in front of investors. There’s lots of negative rhetoric about solo-founders and This is a great lesson that true angel investment isn’t how all good startups start with a co-founding team, just about money and seeing a return, it’s about re- but it’s easy to forget that in any startup, the idea and turning financial wealth and future talent back into vision is usually driven by one person and investors the ecosystem around us in a sustainable way. It’s usually back that visionary individual, trusting them easy to lose that sight at later stages when investors to pull a team together around them. come in with a purely financial focus and forget the emotional journey of the entrepreneur, and wanting In this light, perhaps the biggest thing that Scott re- to see their early vision carried all the way through ceived from AngelHQ, wasn’t money (of which he to the end with that person at the helm creating per- did close that early small round), it was the quality of sonal success for the entrepreneur. 2 Personal Impact Acceleration cus to GreenButton and that helped to accelerate the vision for the IP roadmap, the capital strategy, The key difference around how Marcel operated and a partnership strategy that really defined the versus how some other investors operate is what I trajectory of the company over the coming years. would call the impact his ‘personal acceleration’ had It’s something that many entrepreneurs don’t think on GreenButton. He gave not only money to Green- about early enough in my opinion, and seeing what Button, he also gave his expertise and time - making a difference it made for GreenButton, I hope it is one the transition over time from Investor Director, to that entrepreneurs consider sooner to help shape Chair, to Executive Chair. He did what it took to their path to achieve it. take the company where it needed to go and helped Scott turn this into a success, even if his work tran- There’s a perception I run into often that companies scended pure governance and became semi-opera- are bought not sold, which may be the case for many tional at times. of the high-profile ones we see in the media, but for these stories we often only see the external glamor- It’s easy to treat investing as a volume game by tak- ized view of the ‘overnight success’ so it’s hard to ex- ing portfolio approaches - spreading money, but trapolate what really led to that exit. GreenButton’s abstracting yourself from personal involvement. was one of clear exit focus from the board and kept Whilst the majority of Marcel’s investments are regularly on the agenda at every meeting to ensure hands-off, he is incredibly picky about which invest- they were driving towards that. How many of your ments to go deep on, investing time and money and boards are driving that closely? How many board driving them hard to return. This approach stands papers or shareholders reports talk about driving a in stark contrast in an increasing world of more tra- checklist towards exit - even if that is five years in ditional accelerator programmes who tend to drive the future? companies hard, but with less engaged mentors, and over much shorter periods of time.

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