CEO Reflections - It's About the Journey: Google Ventures, Venture Capital and the Hybrid Cloud

We recently announced a new round of funding led by Google Ventures. It is great to have an incredible set of investors in our corner who can provide more than just the money – Mike Maples (great marketing mind), Dave Barrett (sales and BD help) from Polaris, Matt Murphy (the most tireless and amazingly helpful VC I have ever met) from Kleiner Perkins and now Karim Faris (along with Sam Schillace who is an amazing technical mind) from Google Ventures.

Depending on your outlook, the funding process can be painful or amazingly introspective where you come to a deeper understanding of your company and industry. Having raised several rounds of funding in my career, I would identify with the latter. I joke with my fellow co-founders and senior execs that what does not kill you makes you stronger, and sometimes going up and down Sandhill road feels like that.In walking the VC mile several questions repeatedly came up, for instance, how does Egnyte differentiate itself in this ostensibly crowded space of cloud storage? I’ve thought deeply about this question and in response I posit that differentiation can occur in multiple ways; by target market , i.e. consumer, prosumer, small business or enterprise, by solution approach i.e. pure cloud vs hybrid, or by core problem being solved, i.e. scalability, security, etc.  Each is important in its own right, and the solution needs to take them all in to account, but beginning from the customer pain point is the best place to start.Another important question we heard a lot is, why don’t you offer a free version of the product?  This question is an interesting one. I am of the firm opinion that free users of this class of solution translate to a cost burden that needs to be borne by someone in order to make this a profitable and viable business in the long run. That someone is inevitably the paid user. While that might increase a user base substantially, it does not guarantee any significant conversions to paid use, and in the meantime, your paying customers unnecessarily bear the burden of everyone else. You may recall the problem the Redcross had when they made their coffee and donuts not free.We’re excited about our newest investors, and have a great situation that Google Ventures is in the building right next to us. In fact, we are the only non Google building in the googleplex area! This proximity and their particular working style is amazing, and I am finding the GV folks to be a great help. We have had usability/design sessions with some of their sharpest minds, we are working with an amazing marketing person to focus on PR/comms, and best of all, we’re getting help to hire engineers.  It’s not just about investing smart, but getting smart investors.