Rice and Beans: An Interview with Brent Frei of Smartsheet

When asked what his “old-age” trait, the trait that exists in you that will intensify with age, will be, Brent Frei responds, “Efficiency.” Aside from his intimidating stature and preceding highly accomplished reputation, Brent is a humble man who is strikingly determined. It is apparent that efficiency is core to who he is and efficiency is the core idea behind his company Smartsheet.

While with his previous company, Onyx, Brent realized a problem with operational oversight. The observed problem extended beyond his company. Products popped up like weeds yearly to help with project management and oversight, yet nothing appeared to stick. According to Brent, many adopted tracking programs stating they were “trying such and such” but all continually returned to the use of spreadsheets. “Spreadsheets are immediately available, they’re perceptually free, they’re perfectly flexible, they don’t force me (the user) into a process and they are easily shared and changed.” Brent realized the limitations with spreadsheets. Spreadsheets are not automated. Reminders to complete tasks do not exist within spreadsheets. You had to use other software to produce documents and manage products. Hence, the birth of Smartsheet.

Brent thought, “why not weld the features of project management programs into a spreadsheet and make them work together.” Others had been continually producing products that “lined up with the definition of insanity: doing the same thing over and over while expecting a different result.” Brent’s idea merged these programs into what consumers already identified as their go to solution.

As seemingly simple as the idea appears, do not be fooled. Execution of the idea to creating a product took several years of development.

To aspiring entrepreneurs, Brent offers up this piece of advice:

“If you’re not super committed and not willing to eat rice and beans for years to get there, don’t bother. You have to be unbelievably determined.”

 Smartsheet is a testimony that Brent practices what he preaches. The first few years of Smartsheet’s existence were spent in development. At year 4, Brent was doing sales and began realizing the product did not work as efficiently as they had hoped. They realized the interface of the product was correct; people loved it when they got it. But that was the thing. They had to ‘get it’. Brent explained there were too many core concepts to learn before usability became simple.

Given the feedback, and under instructions from his wife, Brent and his team had new users test the product while they observed. Brent describes that experience as “humiliating”. Brent and his team validated every complaint heard from users. The users were right. The product needed to operate more efficiently. Given this feedback, taking the product out of beta would guarantee the company a spot with the ‘has beens’, all those before them that launched a solution that was under par of what consumers needed. They had a choice, run it into the ground or redevelop the product. They chose the latter.

They spent 18 more months in product development.

“We were set to run out of money in May. It was December. Our adult product was set to launch in February. We were coming out with Gantt Charts. The launch of Google Ads was approaching and we had invested time into adwords…just one of the 3 had to hit.”

 True to his advice, Brent did whatever he could to secure capital for Smartsheet. With 5 small children, Brent sold his house. He also went to his parents and borrowed $300,000. He undoubtedly believed in his product.

“If I believe in something, it’s not going to fail. I will die before it fails.”

The launch of Google Ads proved successful as well as Gantt Charts and the adult product launch. Soon, the company would not run out of cash in May but in June. Then it extended to July, from July to August and then beyond.

The diminishing capital honed in the focus of Smartsheet. They became incredibly, and noticeably, efficient with the use of capital. They focused in on what mattered and what actually had an impact on the growth of the company. Smartsheet began realizing customer growth of 30-40 new customers a month.

Smartsheet has grown from acquiring 30-40 new customers a month to acquiring 180 new customers a day. Today, they are listed at number 22 on Geekwire, Seattle’s Startup Leaderboard. The success can be attributed to Brent, his team and the relentless support around them. Brent’s determination is truly an inspiration. Congratulations, Brent.

Smartsheet has grown from acquiring 30-40 new customers a month to acquiring 180 new customers a day. Today, they are listed at number 22 on Geekwire, Seattle’s Startup Leaderboard. The success can be attributed to Brent, his team and the relentless support around them. Brent’s determination is truly an inspiration. Congratulations, Brent.

Ubermind Goes to Deloitte

Ubermind is a Fremont-based mobile development firm that has built mobile applications for companies such as Target, REI, Amtrak, TrueTV and others. In addition to mobile development, Ubermind also offers strategy, creative, ecommerce, and content management services. As a result of their solid work and their quickly expanding client base, Ubermind was recently purchased by Deloitte to become Deloitte | Ubermind, with offices located in Seattle and Denver. Still providing many of the same services as before, Ubermind now has the additional resources of a major consulting firm to help scale its efforts.

According to a January 5, 2012 post on Ubermind’s blog:

“Why Deloitte? Answer: The mobile revolution is here—it’s time to ready your organization. Deloitte Consulting has well-established technology services across capabilities such as systems integration, enterprise solutions, information management, and emerging technologies. As part of their tech practice, we will lead in strategy, creative, mobile apps, and web.”

Based on this primary source, it looks like Deloitte was looking to quickly build its presence in the mobile enterprise space and saw Ubermind as a turnkey solution to market entry. Having worked with Ubermind on the original iteration of Flash Volunteer’s iPhone app, I can say that their attention to detail and tech know-how are both second to none. It seems like Deloitte saw a great opportunity and pursued an acquisition-based strategy to catapult themselves into a stronger market position via Ubermind’s existing expertise.

Over the course of the next year, I imagine that Ubermind will go on a hiring spree to keep pace with the large amount of new work that will certainly be coming their way. As for their working relationship with Deloitte, I could see Deloitte definitely benefiting from Ubermind’s tech savvy, while Ubermind, which began as a small start-up, learning a lot about the operational side of running a large, international business. In fact, the tag line on Ubermind’s website states “Left brain meets right.” This direct reference to the nature of their future working relationship says a lot about how the next twelve months might unfold. Often, to achieve scale, it seems that scrappy start-ups must forge strategic partnerships with unlikely allies (some of the comments on Ubermind’s blog speak directly to the this point) in order to achieve the sort of impact they would like to see. While this alliance offers many positive outcomes, Ubermind must also be careful to maintain its own identity within the larger ecosystem of Deloitte so it does not become just another cog in a giant wheel.

TeachStreet

Seattle startup TeachStreet was very recently acquired by Amazon and will be closing down on February 15, 2012 – so hurry if you want to see it! The site was launched in April 2008. Michael Arrington’s writeup on TechCrunch describes the site as “a sort of Yelp for real world classes (cooking, dog obedience, music lessons, ballroom dance, foreign language, golf, yoga, etc.), [which] allows instructors to upload information about classes. Users can look for available classes, and read and write reviews on the course and the instructor.”

Amazon isn’t interested in maintaining TeachStreet as a business; GeekWire, which broke the story, suggests that the deal “is looking very much like a ‘talent acquisition.’ The entire TeachStreet team has already joined AmazonLocal, the daily deal service that operates in more than 40 cities across the U.S.”

I think the moral of the story here is that a startup doesn’t have to IPO to be successful; you can still get a great job out of it.

On a personal note (time to name drop), I ran into founder Dave Schappell at a Startup Weekend event at the UW last September and I was really impressed with how intelligent, driven, and genuinely friendly the guy was. If you read this, congratulations Dave!

Why Google Has Its Sights on Motorola Mobility

In August of 2011, Google announced it was entering into an agreement to purchase Motorola Mobility, the maker of Android Phones and Tablets, for $12.5 Billion.

The reasoning for the purchase is of much debate and speculation and Google hasn’t provided many clear answers about its intentions.  However, from the outside the most likely reasons would include
1)      building a stronger patent portfolio to defend itself and Android developers (technology/IP),
2)      adding ability to control the hardware side of Android phones (technology/team), and
3)      creating instant access into the set top box industry (marketshare).

All three reasons could be valid and each will carry advantages and disadvantages.

The most popular speculation is that Google is purchasing Motorola Mobility for access to itself extensive patent portfolio.  Motorola Mobility has been around for a long time now (remember the slim Motorola Q or the Razr?) and over these years has developed a substantial intellectual property (IP) base.  Now this is great for Google’s Android operating system because smartphone manufacturers (HTC, Samsung, LG) have been subject to lawsuits and licensing demands from established giants like Apple and Microsoft if they use the Android “open source” OS on their phones.  This drives up the cost to manufacture phones (and potentially prevents market entry –Galaxy Tab 10.1N) which will hinder growth of the Android OS.  This move would enable Google to extend the patent portfolio to its developers to limit this offensive abuse use of patents.  Of course, there is much debate about what usable patents still exist in that portfolio (Motorola has sold some off during bad financial years) and whether Google got its money’s worth, but it is another pawn in its offensive/defensive game for Android.

Android is typically criticized for having too much fragmentation in the smartphone market—meaning there too many different options for phones in the market to have a concise user experience.  But what one person calls fragmentation, another could call flexibility.  Nonetheless, Google could be acquiring Motorola Mobility to be able to regain some control over the user experience.  Sure, the advantage would be addressing the criticisms and the improving the user experience.  But one disadvantage could be alienating other smartphone manufacturers like HTC and Samsung.  If the Google/Motorola team is working closely on the hardware/software integration, what comparative advantage is left for HTC and Samsung?  Perhaps this could come in the form of reference designs or a stable unified platform (“a vanilla Google experience”) that other manufacturers can build on for differentiation.

I personally believe that the consistently understated part of the transaction is Google’s access to the set top box industry.  The internet industry naturally spread from personal computers to smartphones (which are portable personal computers) in the form of apps and Google was right in the middle of this space with Android.  They realized that information for their major revenue generator (ads) could be gleaned from smartphones and having an understanding of user behavior on their smartphones is useful for segmentation.  Now that more and more people are watching TV on their computers or Home Theater PCs (HTPCs) and there are billions of dollars in the TV advertising industry (Superbowl ads anyone?), Google could be eyeing that market for consumer behavior.  Their first attempt at this was in the form of Google TV and products like the Logitech Revue.  While not a wild success, Google learned some lessons.  For instance that television networks do not want to lose their ad revenues and in turn make up losses by charging high values to carry their programming (a big problem for Netflix).  Additionally, some users did not like the idea of hooking up a box into their digital cable box and then to the TV.  Instead, by acquiring Motorola Mobility (the market leader in cable boxes), Google can integrate Google analytics directly into the cable boxes (whether that is Google TV or not is to be seen).  By doing so they remove the pain point of hooking up another box and they can be a part of the all-you-can-eat packages that cable companies offer thereby avoiding the programming charges.  Then if they add the Google touch to enhance the viewing or program finding experience, it could be a successful combination.  This could be a serious threat to a well-known fruit company’s rumored television product as it is “further up the cable” chain.

I imagine in the next year that Google will act on all of these fronts if the merger is approved (as is expected).  Motorola Mobility is expected to operate as a stand-alone entity from its new parent (likely a move to tame worries from smartphone manufacturers) but certainly I would expect to see tight integration in the set-top box division.  Motorola employees will get access to a parent with lots of cash on-hand and data-driven analytics and Google will get experienced hardware developers to continue the spread of internet onto new devices.  It will be a fun acquisition to watch.