This article is the twenty-second and final chapter of The Entrepreneur's Journey, a collection of stories about startup companies and the entrepreneurs who built them. To continue reading about key startup themes and lessons learned, check out the entire series here in The Seraf Compass, or purchase the book on Amazon in paperback or Kindle format.
Entrepreneur Marty Bodley understands one of the foundational rules of startup liquidity. Startups only achieve timely financial returns for their founders and investors if they are acquired, either by a corporate acquirer or by the public through an IPO. Marty also understands that the vast majority of successful startup exits are to corporate buyers. In his experience, this only happens when startups form relationships with their potential acquirers early on.
For most startups, developing relationships takes time and effort. The CEO has to make a deliberate and concerted effort to find and speak with key industry players to build rapport and awareness over time. Other startups, by contrast, are seemingly built for partnerships. These are startups focused on ecosystems, knowing they will need to work with partners to not only make their product function well but also to get it to customers. Relationship centric startups are practically prewired for potential exits. Marty Bodley’s company, ZiipRoom, was one of those startups.
ZiipRoom was the result of many years of thought by Marty around the issue of the last ten feet in business communications and conferencing. In this case, the last ten feet refers to the fact that business video conferencing and screen sharing simply do not work as easily as they should. The basic long distance networking is not the problem. The problem is in the last ten feet, across that big conference table or small huddle room in every company. Conferencing equipment’s usability, performance and reliability are too low for ordinary employees.
Marty’s experience working for the defense contractor Raytheon and for the electronics company GN Group (the Copenhagen-based maker of Jabra headsets) introduced him firsthand to the nearly universal pain of trying to collaborate with remote colleagues, partners and prospects over video. For Marty, and everyone else in the increasingly global business environment, video conferencing tools are critical. But to everyone’s frustration, they continue to be expensive, complicated, unreliable and maddening to use.
Marty stayed intrigued by this last ten feet problem. As it turned out, Marty was the perfect person to solve it. With a BSEE in Electrical and Electronics Engineering, an MSEE in Electromagnetics from the University of Massachusetts, and an executive MBA from MIT, Marty certainly had the educational chops to tackle the problem.
Marty had the experience and skills as well. After fifteen years in large enterprises, Marty combined his wireless and product management skills to become the CEO and founder of two electronic startups: Maestro, a wireless product developer and manufacturer, and Revolabs, an audio solutions provider focused on the enterprise conferencing and collaboration market. By the time Marty sold Revolabs to the Yamaha Corporation, he knew how to develop a product and bring it to market. Finding himself with some time on his hands after selling his company, Marty formed ZiipRoom and set out to solve the last ten feet problem.
Born in the midwestern suburbs of Cleveland, Ohio in the mid-1960s, Marty Bodley’s childhood started out in a fairly typical middle class American way. At age eight, life took a big turn when his parents picked up the family and moved clear to the other side of the planet. As a result of that move, Marty spent three very formative years living in Australia. He said, “My parents got involved in an exchange program with the Australian government. They were both schoolteachers. Australia’s population was growing and many communities needed school teachers. So I ended up as a young kid being transplanted to a new culture for three years.”
The family settled in Kiama, on Australia’s south east coast. Marty describes it as idyllic. He elaborates, “It was a scenic ocean town with salt breezes, scattered coastal pines along cliff tops, and some of the best beaches in the world, which included two cliffside blowholes where the surf would spray vertically up out of the rocks.” Marty recalls it was the kind of small town where everybody knows everybody. “To us it was a bit of a culture shock that required some adjustment. It seemed like we had walked back in time when arriving there from the US.” He continues, “If you wanted to make a phone call, there was an operator who would connect you on a switchboard.” It took some time, but after a period of adjustment, the Bodleys were warmly accepted and felt at home.
Marty credits some of his success in life to the skills his Australian experience taught him: the ability to think broadly, to bridge cultural gaps and to find ways to partner with others. “I do think it shaped my character and my personality and probably my approach to business. I gained what I describe as a global perspective at an early age. When I came back from Australia, I was in fourth grade. I went back into the same elementary school I attended before I left. All my buddies were still there, and I suddenly felt like a total outlier. They had none of the perspective I did about other places, other people and other cultures.”
At its core, the last ten feet problem with a video conference call is analogous to a cross-cultural problem. Every conferencing device manufacturer and software provider is its own tribe and wants to own and control its users’ entire experience, end-to-end. The more the market fragmented into warring factions, the more companies were incentivized to own the entire process to give their customers any chance of a working solution. The resulting Tower of Babel stifled product effectiveness, and destroyed the user’s experience. Marty said, “Our research confirmed an average of more than eight minutes of time wasted at the beginning of each meeting just getting the technology to work, often requiring costly technical support staff.”
Marty’s findings pinpointed a root cause. Most companies use multiple cloud services. Zoom, Skype, WebEx, Fuze, Go-To-Meeting, Join.me, Google Hangouts, Adobe Connect, AnyMeeting and UberConference all had their own tribe of loyal users. But most hardware solutions natively support only a single one, or maybe two, of these cloud video conferencing service providers. Compounding the problem, conferencing hardware generally has a poor user interface for participant authentication and for establishing connections.
Marty knew if someone could provide an easier solution they could tap into a $2.3 billion market representing 60 million conference rooms worldwide. Perhaps it was Marty’s early life experience which led to his broader perspective, but when he looked at this messy market, he saw an enormous opportunity. With ZiipRoom, Marty's goal was no less than to provide universal connectivity. ZiipRoom’s solution was designed to detect and automatically authenticate a participant on arrival to facilitate simple, secure wireless connectivity.
ZiipRoom’s product was designed to simplify the three most common conference activities: wireless presentations, videoconferences from any video service provider, and making speakerphone calls. ZiipRoom enabled meeting room participants to wirelessly present from any device without needing to plug in a cable, make voice calls over corporate phone systems, and join video calls utilizing any video conferencing service. With ZiipRoom, things just seemed to work.
Initially, Marty expected he would need to provide a lot of the necessary hardware to make things work. He was prepared to build a basic computing device that could serve as the in-room hub for initiating calls and expected he’d probably need to create a complete kit by integrating with camera, audio and video manufacturers to provide the full functionality.
From the start, ZiipRoom was founded on the assumption it would partner with other companies for parts of its solution. And, these partners would also sell ZiipRoom’s product to their customers. Marty approached the business with a philosophy of collaboration. As Marty explains it, “I would advise anyone to be very cautious about business plans that have you in a dark hole working alone for long periods of time. Of course, you have to protect your trade secrets. But there's a tradeoff, because if you don't tell people what you're doing, interesting opportunities won't come along. You won’t get critical feedback, you won't pivot, and you won't make decisions that are necessary for the good of the company. You'll just keep going along down in your own underground laboratory.”
Marty has a bedrock principle, “One very important concept I learned over fifteen years of being an entrepreneur is speaking with a wide audience is vital. It is important not to be overly cautious. I'm sure there are cases where people have been burned. But this idea of forming partnerships is the key to everything. Looking for win-wins along the way and doing that as much as you can is definitely a facilitator for growth, and ultimately, selling your company. A good motto to sum up my philosophy might be demo or die.”
In the early days at ZiipRoom, Marty spoke to a number of potential investors. During these conversations, Marty was surprised to receive a fair amount of pushback on his desire to build a hardware device to go along with the company’s software platform. Investors can be very cautious about backing hardware companies because there is a lot less room for error in hardware business plans. Compared to software companies, physical product companies have higher cost structures and lower product margins.
As it turned out, investors were not the only ones who questioned the necessity of ZiipRoom making hardware. Early in the process Marty had spoken with Logitech, one of his most likely potential partners. Logitech had just released a disruptive business conferencing device. Marty said, “It was called the Logitech Meetup. It was an all-in-one device. It was designed to be put right on top or below a display screen. It had a camera, a sound bar with speakers and a set of microphones. It was very simple to connect; an all-in-one, plug-and-play device. When they released it, they sort of dropped a bomb on the big hardware providers.” But while the Logitech hardware was good, Logitech did not have the software figured out. This made them a perfect go-to-market partner for ZiipRoom.
The input from investors and Logitech got Marty thinking even more broadly about building partner relationships. What if they partnered not just for some of their hardware needs, but for ALL of their hardware needs? Rather than being a hardware competitor fighting all the other players for market share, they could live in the cloud and be the glue that tied all the balkanized hardware and software players together. This felt like the way to go. They immediately built a minimum viable product and gathered some example hardware to demo it with. They showed it to anyone who would listen: potential hardware partners, potential web conferencing partners, and potential customers.
Everyone they talked to had valuable input. Hardware players all grudgingly admitted it would make their solution more usable, and more valuable. They suggested ways ZiipRoom could improve their hardware integrations. Cloud conferencing providers saw the potential to give up having to support a huge and ever changing array of hardware configurations. They gave Marty suggestions for how ZiipRoom might work with them. Potential customers gave encouragement and vital feedback about what worked for them and what didn’t, along with suggestions for how to improve the product.
Not only did all this feedback improve and speed up the product’s development, it also sped up the company’s path to an exit and a payout to the investors. Marty said, “I was sharing ideas, forming relationships, building partnerships, looking for win-wins along the way. Having those conversations as much as you can is definitely an accelerator for an early exit. The acquisition discussions will just start happening by default. A highly partnership driven model leads to getting on the radar of people who are looking for solutions. It's a beautiful way to do it. Imagine if you had a startup that was totally isolated and you wanted to create many excellent acquisition at bats from scratch? It would be a massive amount of work.”
Marty observes it also levels the playing field by elevating the startup’s credibility and perceived value. He said, “When you are in partnership mode, you are playing nice, you are in the business ecosystem, and you're having conversations with people who are potential suitors. You're not having conversations about acquisition or mergers. It's all about ‘Hey I'm going to help you sell more product and you're going to help me sell more product and it's win-win and synergistic. Let's go do business together.’”
“Rather than having to walk in cold and say, ‘I’d like to be acquired by you,’ you get to work together, provide value and prove your worth first.” Marty continues, “It's really hard to walk in with no context, and it always looks bad. Right away it's ‘Why is this guy coming in to talk to me? He must be looking to try to sell his company.’ Whereas with the existing partnership, the tone is all about value-add and collaboration. I'm not going in there and saying ‘I want to be bought.’ We never did any of that with our partners. Partnering first is much better than trying to be in the lab for three years developing something you then spring on the market. You haven't primed anybody in terms of what you're doing or let them reach their own conclusion about it. I think buyers are much more likely to buy when they think it's their idea.”
Instead of focusing on being acquired, ZiipRoom went about the business of filling out its product vision and sharing it with any relevant player who would listen. Marty and his team talked to potential partners and they talked to potential enterprise customers. And as sure as day follows night, acquisition interest began to pile up. Even potential customers expressed interest in acquiring the company. Marty said, “We went into a big global coworking provider saying, ‘Hey you've got tenants that want to join video calls in your meeting rooms and you don't have any technology in there. We think we have a great solution. We want you to be a customer.’ They were eager to talk to us and sure enough, before long, there were M&A people showing up during our meetings.”
Marty said, “We were focused on refining our minimum viable product based on the feedback we were hearing. But there were a lot of people interested in having the acquisition discussion, more so than I’ve ever seen. It was kind of wild.” It was not limited to the obvious conference technology vendors. What really surprised Marty was the interest they drew from people adjacent to the ecosystem. Marty said, “The ultimate acquirer was not even on our radar because they were not playing in this space. We had no idea they wanted to get in. It's funny, we started gearing up to release a product and we found ourselves repeatedly having these acquisition discussions. The co-working provider was not on our list of potential acquirers, either. We knew they'd be a great customer, but we had no idea they were interested in buying technology companies. I was trying to get a great customer success story. I wanted them to be my flagship customer. And then sure enough that turned into an acquisition discussion.”
As product development advanced, acquisition discussions came to a head quickly and the company ended up with three very serious potential buyers around the table at the same time. One of those buyers made an offer they could not refuse. Less than 24 months from inception, ZiipRoom was acquired by the Bose Corporation.
Because Marty understood the importance of speaking with the participants in his industry and forming win-win partnerships with key players, there was never a time when his company was not visible and relevant. As a result, he was able to drive an acquisition of the company early in its development and before he had to raise a lot of money. That fast, capital efficient outcome was good for everyone. The buyer was delighted, and the shareholders were happy with an excellent and timely return on their investment. Marty now finds himself in a job that blends the best of his enterprise and entrepreneurial experiences together. He is running a team that is helping a big company blaze a new trail in a market Marty himself was the first to recognize.
Interested in reading more stories about key startup themes and lessons learned? View the entire collection here in The Seraf Compass or purchase the book on Amazon in paperback or Kindle format.