From an EIR Experiment to a Fast Growth SaaS Company: Joe Kinsella, Founder and CTO of CloudHealth (Part 4)

Sramana Mitra: What year are we now?

Joe Kinsella: 2012.

Sramana Mitra: What was the relationship with Northbridge? Is that the company that had funded the company that you went to work for?

Joe Kinsella: Yes, Northbridge was one of the investors in Silverback. One of the partners there, Jeff McCarthy, was on the Board at Silverback. I looked at two firms for an EIR. I also looked at a newer firm in Boston. I ended up deciding to go with Northbridge.

Sramana Mitra: How did you utilize your EIR time?

Joe Kinsella: I needed the brand to work under. As I started making calls and engaging with people, I had something more than just me as a one-person business. I would show up everyday at work. I had space on their venture side and I committed myself to a lean process. In addition to the standard things you do when you’re trying to form the idea, I ran experiments. I designed lean experiments to prove or disprove certain concepts in the market. The intersection of cloud computing and management of infrastructure was a rich space.

It was a challenge figuring out where the big opportunity to build the billion dollar business was. Some of my experiments were, I’d put up fake websites and run ad campaigns to prove or disprove a concept. I ran concierge services with companies in the Boston area. I ran experiments trying to sell the product. The goal was to take the core hypothesis and prove or disprove them. From that learning, I started to hone where I wanted to focus on. From that, came a lot of learning that ended up fostering CloudHealth. One of my lean experiments led to founding of the company. I’ve been hacking an MVP on the side. It had limited functionality.

I decided to go sell it. I wanted to sell it and put a price of $50,000 knowing that if I wanted to sell a crude MVP, I would get turned down. In the process of being turned down, my goal was to figure out what the gap was. What is it that you’re going to pay $50,000 for. Part of the experiment was, I had to sell it to people I didn’t know. One of the early companies I talked to came from my CEO at Sonian. He connected me with the CFO of a company out in Utah. It was a terrible sales call. The CFO just wanted me to hand my software to him and go away.

At the end of it, I felt like it didn’t go the way I thought. I apologized that it wasn’t what he expected in terms of the discussion. He said, “I want you to chat with our VP Engineering tomorrow.” I set up a web meeting the next day and spent an hour with the VP Engineering. The VP had, in the room, a series of people across his organization. I wasn’t five minutes in when I realized that I was in a room of experts. They knew how to manage the cloud at scale. They knew everything I knew.

Sramana Mitra: Why would they have this conversation with you if they didn’t have a pain? Why wouldn’t they buy?

Joe Kinsella: This was naive of me. Like a classic tech guy, I forgot to close. Out of the blue, the VP Engineering said, “We’ll buy.” Send us the order form and we’re good to go. I was taken aback.

Sramana Mitra: You were having this conversation in concept. You didn’t have a product, right?

Joe Kinsella: I did. I had an MVP. I started talking him out of it, “Your CFO said you weren’t interested.” Inadvertently, I walked into the classic early evangelist. If someone who had deep pain, had deep subject matter expertise, and was building a solution to that deep pain, they just look at it and said, “Here’s a guy who seems smart and motivated. Instead of building it ourselves, why don’t we let him build it?”

This segment is part 4 in the series : From an EIR Experiment to a Fast Growth SaaS Company: Joe Kinsella, Founder and CTO of CloudHealth
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