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6fusion CEO John Cowan Offers 11 Tips for Channel Development and Software Startups (Page 1 of 2)

Raleigh, N.C.-based developer 6fusion recently snared $7 million in Series-B funding to continue to develop and market its cloud management products; this follows a seed round of $3 million. That's a pretty healthy endorsement for a company that's been around for only three years, and for founders who don't have a star-studded string of IPOs behind them.

Don't get us wrong: Co-founders John Cowan and Delano Seymour are sharp guys with big ideas. It's just that usually, when you read about that kind of VC money, you find mention of big-name past successes in the founders' backgrounds.

Cowan, who serves as 6fusion's CEO, came from 12 years of business and product development in  IT and telecommunications. Seymour, now 6fusion's CTO, is a Canadian engineer and developer who spent most of his time providing IT services for offshore companies in Bermuda.

The big idea behind 6fusion is this: Cloud computing needs a better way to simplify the metering, consumption, and billing of compute, storage and network resources. To that end, they developed what they call the Workload Allocation Cube (WAC), which 6fusion says is the most granular and universal metric for metering and delivering cloud computing on the market today.

On top of the WAC, they built UC6, which provides a customizable interface for users to build, customize, and manage cloud-based applications and distributed workloads.

We recently caught up with Cowan to get his advice for other software startups.

Tip #1: Use consulting revenues to keep the lights on.

"Delano and I built the core technology as part of our managed services practice," Cowan says. "We were using it in production since 2006. The platform we built on top of that has been around since early 2008. We started with a base of businesses, and that was enough to keep the lights on. We did that while we were filing all our patent applications.

"We were growing modestly. Basically, 2010 and 2011 were the initial breakout years. Revenue in 2010 was triple of 2009, and 2011 was a little more than double of 2010. We're pretty much off the chart as far as our revenues forecast."

6fusion now has 25 employees, and Cowan says it will be 40 by end of  2011 -- "depending on how successful our recruiters are." 

Tip #2: If capital doesn't come calling, build relationships.

"Early 2009 was not a good time for the capital markets," says Cowan, "so we continued bootstrapping through 2009. We completed the provisional patent process, but at the same time we were building foundational relationships, not the least of which was with HP.

"If you presented me with HP today, they would probably go to a second or third level of priorities for us -- it's kind of like steering a whale with a canoe paddle. But they were the proof point for us, early on.

"Having a letter on EDS letterhead was great; you can't buy that kind of support. But what should not be lost on you is the effort required to make bidirectional relationships work; I worked for 18 months trying to move that needle."

Tip #3: Done right, channels can work.

"Unlike our peers who are knocking on doors, we're 100 percent channel focused," Cowan says, "so we're capitalizing on their channel resources.

"That brings about a tremendous demand; the biggest problem we have now is not drowning ourselves. Everyone hopes to have that problem -- it sounds like a really cool thing -- but the potential to drown in your own water is very easy if you're not extremely tactical in the way you do things. Everything has to be very carefully thought out. It's all about pacing yourself.

"Now that we have a lot of inbound business, we have to be much more selective in who we engage with."

Tip #4: Create a prototypical partner profile.

"When you start out, anybody who will listen is good enough for you," says Cowan. "But you quickly learn there's an 80-20 rule in choosing channel partners.

"Figuring out the prototypical partner profile is critical. Learning how to be selective is not something that comes naturally to most entrepreneurs -- and we were no different. At the end of the day, numbers really matter; partners really matter.

"What I apply -- what I consider the acid test -- has to do with the bidirectional nature of the potential relationship. Are they looking to sell us something, or are they thinking about how they can make 6fusion better because of the relationship? It has to be very clear and very present. If you have to work extra hard to see that, you’re  probably deluding yourself -- so walk away."

Tip #5: Part of the partner test must be monetary.

"You need to establish a low-water mark for partners, and it's usually monetary," Cowan says. "You have to convey your value.

"When we started we had no entry fee; 'Hey, we'll do business with anyone.' Later, the first mark was $250 a month; they have to use the platform to at least that extent.

"The next evolution for us is a tiered partner program that has much higher dollar marks attached to it: named account management, 24x7 support, higher levels of discounts, and other components. We have three tiers; you can kind of map them to the size of the IT service organization."

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