20-Year Journey of a Fat Startup with Major Pivots: Scott Sellers, CEO of Azul (Part 4)

Sramana Mitra: How long did it take you to get the first product out?

Scott Sellers: It always takes longer than you think, especially in the world of hardware and chip design. The first product was released in the early part of 2005. It was a good solid three years.

Sramana Mitra: Did you have customers lined up by the time the product was coming into the market?

Scott Sellers: We did. We had a lot of customer interest. This is the reason why I’m glad we’re not in the hardware business anymore. We started shipping these boxes. We outsourced contract manufacturers. We would rigorously test them. Then we’d ship them. The failure rate, upon installation, was terrible initially.

This is the usual thing of new product introduction and understanding what happened in transport. We went through a lot of that. What really kept us going was that the customer interest was incredibly high. Everyone was very supportive of what we were doing. We had a tremendous team.

Sramana Mitra: Were there particular use cases where you were seeing traction?

Scott Sellers: There were two major markets that we focused on. A lot of these were true innovators and some of the first to use Java in a widespread manner. The first one is financial services. That’s always a segment that is thirsty for the latest and greatest. It has always been that way and will probably be always that way.

A lot of the widespread Java deployments were in financial services, so traditional investment banks and the traditional banks on Wall Street. They were heavy users of Java and were looking for that technology advantage.

The second was telecommunications. Because of the speed of the business, it looks a lot like financial services. It’s being able to handle high loads and high peaks. Processing network packets in telecommunications look an awful lot like processing trades. The nature of high bandwidth and high capacity machines lends itself very well in both those markets.

Sramana Mitra: From 2002 to now, it’s the same company. I take it that the hardware went pretty far.

Scott Sellers: It did. We definitely didn’t sit down in 2002 and develop a 20-year business plan. People ask me all the time why I’m still here. The reason is we continue to innovate and pivot as the world changes. Even though it’s technically the same, we have many different lives just as we have evolved our company and changed a number of different things.

The first major turning point was in 2008. The financial crisis caused us to do some serious soul-searching. It was truly a fork in the road. One fork would be to continue raising a lot of money for the hardware business. That was very capital-intensive. The other route was one of the things that we continue to hear, “Can’t you give this to us in software form? I’d rather run this on a commodity computer.” That kept coming up.

The net of it, it allowed us to make a hard decision. We love the Java space and the enterprise sector, but we needed to pivot our product strategy. We made the decision to get out of the hardware business. That’s now an easy thing to do. The thing that served us well is we wanted to do it in a way that we were never going to leave any of our existing customers in any way.

We put our own names on this. There is no way that we weren’t going to create an easy transition. Even though it took us a number of years, every single one of those hardware customers moved over to our software offering. People always say customers first. We truly embrace that.

This segment is part 4 in the series : 20-Year Journey of a Fat Startup with Major Pivots: Scott Sellers, CEO of Azul
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