Building a Technology Product Company From India: Varun Singh, Founder and CTO of ScaleArc (Part 5)

Sramana Mitra: You guys have already done six months prototype building with seven engineers?

Varun Singh: Yes.

Sramana Mitra: Nexus gave you money before that process started?

Varun Singh: Nexus gave us our seed round.

Sramana Mitra: How much?

Varun Singh: $750,000.

Sramana Mitra: How long did that take you?

Varun Singh: That took us two and a half years.

Sramana Mitra: That’s good.

Varun Singh: We knew it was going to be a hard problem to solve. We had to be conservative. We had to make sure that we could actually get revenues on the side to go ahead and keep it up. We were still doing other things. We wanted to learn how the appliance market works. We wanted to learn how to sell a physical hardware box to a customer even though our magic was going to be completely software.

Sramana Mitra: So your go-to-market delivery model was appliance?

Varun Singh: Our original version was. Now, it’s not. Before that, we were still shipping it as software as well as hardware. The reason for that was the philosophy that people pay more for software when it’s fully integrated with hardware and provided to them rather than software alone.

Sramana Mitra: If that makes it plug-and-play versus having to do a lot of integration.

Varun Singh: Precisely.

Sramana Mitra: That’s the whole appliance case. You said you were doing other things. What does that mean?

Varun Singh: We tried to learn the appliance space. We built a small company where the fundamental premise was good hardware, open source software, well-integrated, and delivered to you as a package.

Sramana Mitra: You were running another business?

Varun Singh: On the side. It was not a high capacity business, but it allowed us to understand what the customer mentality in buying appliance is and what it takes to support them. When you go ahead and deliver an appliance, Open Filers is one of the popular open source storage operating systems. We built commercial storage arrays which you could buy from a Super Micro or somebody like that and integrate with Open Filer.

Sramana Mitra: Right from the beginning, you decided that you were going to be a Silicon Valley company. The seed money was put into the US company with an Indian subsidiary.

Varun Singh: Exactly.

Sramana Mitra: For Series A, Trinity led the round. How much money do you have now?

Varun Singh: $5.3 million at that point.

Sramana Mitra: That’s beginning of 2012?

Varun Singh: Yes.

Sramana Mitra: Your beta is already in the market.

Varun Singh: No, GA.

Sramana Mitra: Excellent.

Varun Singh: Within 15 days of that, we had closed our first US customer.

Sramana Mitra: Who was that?

Varun Singh: Kickside, a gaming company based out of San Francisco. They were scaling very well. They had a high demand for databases. They wanted to use us but this is where the appliance model first unraveled. They were running a data center where they can’t take anything in other than what the data center provides. Now, we’ve got to go ahead and do a custom install remotely on third-party hardware that we’ve never seen before. We did that and learned from that.

Sramana Mitra: That’s a good situation.

Varun Singh: If a new server model came around, it would take us barely a day to go ahead to move to that model. But it was still going to be a situation where whatever we shipped was all going to be integrated and only a limited set of platform are supported. This was a push to exactly where we needed to go, which was to find a way to make it run anywhere. We did that.

Within a couple of months, we had to make it work in Amazon. After that, we had to make it work for VMWare. By the end of 2012, we were in a place where the product was completely software and could run anywhere.

Sramana Mitra: You were on a SaaS business model?

Varun Singh: Not yet. That’s the push that happened next. We were still selling perpetual software.

Sramana Mitra: With maintenance.

Varun Singh: Yes. We were doing annual subscriptions for the customers on the cloud because that’s how it works. We were also doing hourly on Amazon specifically.

Sramana Mitra: Hourly?

Varun Singh: You could go ahead and start a VM and for each hour, you pay a certain amount. We were doing that because that’s the model that would work best on Amazon. That was the model that Amazon wanted to push. We had done that already. We knew how to do software from a subscription standpoint in software, but we didn’t yet have the full understanding of how to make everything subscription. That was the next round.

Sramana Mitra: What about team? Doing all this and learning on the job, what did you bring in to supplement your own knowledge?

Varun Singh: A lot of different things. In 2010, I came here to file all our IP. We filed four patents in 2012 for the product. They’re all granted right now. Nothing was taken out. It was quite special.

This segment is part 5 in the series : Building a Technology Product Company From India: Varun Singh, Founder and CTO of ScaleArc
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