Jesse Lee is a technology and business management specialist best known as the co-founder of the popular technology business management software company Apptio (NASDAQ: APTI, market cap: $1.8b). Today, Jesse is Chief Digital Officer at the IT consultancy firm StrataPrime.
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How did you begin working in the IT industry? What kickstarted your interest?
I read a study recently claiming that around 80 percent of software developers started out with a passion for computer engineering and are self-taught. The same can be said for me. I had some spare time during my Environmental Engineering courses at University, so I enlisted in an engineering honors program and built a programming model that simulated buildings withstanding earthquakes.
I went through law school, worked a legal clerkship and realized I didn’t want it to be the arc of my career after all. I’ve drawn upon that legal training for small business many times, but I never wanted to be a litigator or a full-time solicitor. I have always been most interested in technology, specifically the intersection of business and technology – the challenges, opportunities, and skill set needed to make very different people with different jobs help each other to achieve a common goal.
You are probably best known for the technology business management platform Apptio, can you tell us a little more about that particular business model?
The product vision for Apptio has always been the same. The concept revolves around modeling how IT money is spent. One expresses that spend in various buckets that make sense to technical and business people in different roles. The idea was and still is to bring transparency to what was previously unknown or perhaps unhelpfully expressed.
Business and technical people historically don’t communicate very well, so we saw an opportunity in software to model what is a “sub-ledger for IT” and express it in different ways. From that historical view, one moves to efficiency of current spend as viewed next to certain benchmarks, and finally looking to the future: how better to budget and forecast for IT.
What was your motivation for Apptio?
I had come off the back of many consulting positions and was eager to make an equity play — to acquire some investment and build a product with a financing runway, rather than billing out my hours and the hours of my team.
I had never really done that at scale and I wanted to see how the business worked and try my hand at building, selling, marketing, and supporting custom SaaS products, working alongside some wonderful people.
That was the motivation. Our CTO and myself coded the prototype that got our first round of funding. When we founded the company on Nov 1 2007, we did so taking on a $7 million venture capital investment for a $21 million post-money valuation. Our prototype, along with some early traction accounts and relationships into the venture capital community, got us that deal.
I wanted to use the Apptio experience as my master’s degree, so I moved on from engineering and started the Customer Success division. It was inspired by what Salesforce.com had started a few years earlier. From there I moved into the Product’s organization, starting and running Technical Marketing. From there into Pre-Sales where I carried a license quota for the first time, and then into a brand new strategy function, then back into Customer Success where I ran USA East, and then EMEA Customer Success.
Had any team members experienced this early stage funding process in other ventures?
Yes, indeed, one would be the CEO, and also our CFO. The investors were well known to them and had just made a lot of money on the sale of a company of which these two and some of my other very good friends had launched. So part of the founding team were known entities. The venture capital community will look for three things early days. They will look for a great idea that they think the market is ready for, a great team, and differentiating technology. To the extent you have a founding team that posted up some past success for the potential investors, that makes financing easier especially in the earliest, riskiest days.
What did it feel like to go public with Apptio?
On that day of, it felt pretty awesome. It’s great to see your team up on a Times Square jumbotron, and it was undoubtedly a great milestone. To the investors, an IPO is just a financing event and a new beginning as opposed to a finish line. The investors and the C-suite lost no chance to remind everyone of that, to be sure. But it was a nice moment of validation, and for the many employees that worked hard and counted on some equity upside one day, it was a big deal and much more than just a financing event.
What changed with your next venture, Xirocco?
Xirocco was a bootstrapped experiment that my co-founder is still running – an interesting play regarding bringing SaaS to enterprise strategy creation and execution. After some months, and despite some early wins, I rolled out, as I don’t think it’s destined to grow by leaps and bounds as originally we had planned. I have decided to focus on one or two different projects closer to my sphere of expertise and destined to grow very quickly.
You’ve started a new role with Strata Prime, what’s your position there?
I am a Chief Digital Officer at StrataPrime. These people are former partners and are well known to me as incredibly hard workers and as absolute scientists at cost optimization, backed by a smart methodology and engagement model. StataPrime has earned its way into 300% year-on-year (YOY) growth for the last two years. We are now entering the next phase of growth and scale.
I have worked at over a half dozen boutique consultancies over some ten or twelve years, and I co-founded half of those. One of those grew to the point of acquisition by Deloitte Digital; another was acquired by Accenture Federal (both after I was gone, to be clear). StrataPrime stands apart in terms of quality and time to value. The goal is (1) to prove positive project ROI through cost optimization wins, and (2) to leave a customer with an enduring capability to govern their IT estate more cost efficiently. Enterprise IT cost optimization is a passion and skill set off my own as well, and that’s why we joined up.
In five years time?
Now that the company is coming off of two years 3x growth YoY, we have some fun scaling challenges. There is a high-quality bar to maintain, and there is the challenge of further competitive differentiation. The company will scale aggressively into western Europe, and there is a Canadian and North American presence as well.
The “Digital” bit of my CDO role has to do with new innovative solutions that drive more value for StrataPrime customers and partners – all focused on what we do best. We’ll be bringing forward some exciting and innovative solutions to tackle those challenges. We’ll have more to say about that in the months ahead.
What advice do you have for budding entrepreneurs?
Appreciate that investors don’t care about your product. They just don’t care.
If you are a budding entrepreneur and have not accepted this already, then that is worth saying three times. So once again, they do not care about your product.
They care about your traction. From your traction they will infer that (1) some value has been created and could possibly grow further, and (2) you have the chops to sell it.
Don’t make that mistake that I made 15-20 years ago by thinking that if you team up with other great developers and pitch your awesome product idea, that’s all you need in-house to start your business. What you need is a crack team rounded out to two to five people in different roles, and a market that is ready for your idea, AND some differentiating technology. Off of that, you need to build your traction group as fast and far as you can before looking for investors.
I made several attempts to secure investment for some very cool product ideas and eventually figured out that if I’m going to that, the fastest path forward is to team up with someone who had already taken investment from those people before and generated a nice return for them. Make sure you have someone on you’re a team who has already achieved success in your sector.
Also, to the SaaS entrepreneur: be careful about taking advice from experienced windbags like me. Old formulas are probably outdated, maybe including the advice a few paragraphs above. The old SaaS success stories went to market against on-premise business models. Today the budding entrepreneur is rocking up against SaaS incumbents, so the attack vector and battle plan needs to look different. Moreover, the investment experience that I described just now covered the traditional VC route, whereas that model is getting partially displaced by other models such as crowdsourced equity investing. There is a lot to learn in this space, so bounce your plans off of your trusted advisors and make sure you have your bases covered.
Good luck and God bless in your venture; I look forward to learning from your own experiences and successes before long!
Software specialist and seasoned entrepreneur Jesse Lee discusses cloud migration, vendor outsourcing, and why better supplier-management tools and processes are essential to competitive advantage