John Fearon eschews the notion of going full tilt, 24x7x365 regular office hours
Had to change business model to accommodate the ‘holy grail’ of Asian venture investing
OUT of the 70 over startups that took part in last year’s inaugural DemoAsia held in March in Singapore, DropMySite was the one which impressed the judging panel the most and was declared the most impressive start-up.
That declaration does not come with the guarantee of eager investors lining up to give you money, but it does raise your profile among them.
DemoAsia is an attempt to replicate Demo in the US, an event that start-ups there actually compete in for the right to launch or demonstrate their products or services in front of investors and media.
Companies that get selected actually pay to participate. It was the same for DemoAsia, but with a host country twist. As Singapore was footing the bill to bring the event to Asia in a bid to position itself as the start-up hub of Asia, more than half of the start-ups that made their pitch were Singapore-based.
This writer was there when a clearly nervous John Fearon (pic), founder and chief executive officer of Dropmysite Pte Ltd, wowed the judges in the two minutes allotted with the simplicity of his product.
At that time he showing off his company's other cloud service called DropMyEmail, which backs up email accounts onto the cloud in two simple steps. It is one of the things that users take for granted until it happens to them – having their emails wiped out by hackers or what is called “instance failure,” which is database-related.
Since then, the South African-born Fearon's company has gone on to expand its service offerings to backing up websites and extending its reach to corporates by offering cloud-based database backup with DropMySite. Last June, it even acquired, for an undisclosed amount, US-based OrbitFiles, a cloud backup and sharing solution site with a database of 235,000 signups, taking its total database to over one million.
While at the time it hailed the acquisition as helping it achieve “critical mass,” in a recent interview with Digital News Asia (DNA), Fearon acknowledges that when it comes to investors in Asia, user number or traction pale in comparison to what investors really want to see.
“It is all about path to profitability,” he says, laughingly adding, “the holy grail of Asia.”
Thus the company changed its business model to one in which users have to pay for the service. “Being based in Asia, we have to show sales more than user numbers. Venture capitalists here don’t look for a company to be game-changing,” he claims.
Hence Fearon talking up his start-up’s “clear line to profitability,” and with a few deals in the works, which if executed on, would “enable the company to be profitable this year.”
Ironically, this is when he says the VCs will want to give him the money. “So, we’ll take the money when we don’t need the money,” he laughs.
When that happens, Fearon will be a busy man indeed as he already has about 10 investors at present who in total have invested S$1 million into his company. Crystal Horse Investments is his main investor and the rest are angels with small amounts pumped in. Singapore based Crystal Horse is mainly involved in angel funding and has around seven investments in Malaysian start-ups too.
While Fearon may come across as being almost cynical of how venture and angel money needs to be attracted, he nonetheless acknowledges that being in Singapore has been really good for his start-up, even though one would think that some of that mineral-based wealth of South Africa would find its way into tech start-ups.
While there have been some interesting plays back home, Fearon says that the pool of start-ups in South Africa is too small to attract serious investor interest.
Interestingly, one of the key lessons that he has learnt is that “connections really, really matter and hiring the right people to bring in sales is fundamentally important.”
In fact, this people and connection part is not really spoken about, nor given the mention or credit it should get in the start-up environment, he feels.“It [media coverage] is all about, like you build this magical product and have these magical numbers and everything happens by itself, but that is not the reality.”
Business development takes time and needs people to be connected to other people, he says. He gives the example of how his company’s best connector is an existing investor who does not ask for anything in return for the connections he helps DropMySite make.
“He just wants to protect his investment in us,” notes Fearon, who is quick to add that his lead investor Crystal Horse is great but it is not the one he uses time to make connections with other investors.
It’s all about trust and people relationships because there is so much risk in start-ups.
He notes that there is so much talk about having a “good team” but without there being much clarity or understanding of what this actually means. He hopes at some point to write about this.
“The different types of people you need in a company and how you can get those resources without killing yourself and without paying them salaries. You can get them into your company in different ways,” he says.
Fearon feels that the core of any tech start-up should consist of a solid administration person to handle all the nitty-gritty paperwork, a techie and a communications expert. The founders have to be jack of all trades.
He is very happy with his current team but has lost some senior people over time and says this attrition is just the nature of all companies, but that it is perhaps “more violent” in start-ups.
Fearon, who has been in other start-ups, including AsiaRooms.com, before launching DropMySite, also has an interesting way of keeping himself motivated. “To provide for my family is my main motivation,” he says, but he also makes the observation that the failure of many start-ups boiled down to the “founders tending to work at their own pace and not keeping regular office hours.”
What is often seen as one of the perks of being a founder, the ability to dictate how, where and when to work, for Fearon is a strict no-no. “I keep a regular work schedule and act like I have a boss to report to.”
While the prevailing notion is that entrepreneurs need to be at 110% all the time, Fearon flat out says, “That’s a lie. You can maybe push yourself for six months, but you can’t do that physically beyond that. You just run out of juice.”
Which is why he sticks to maintaining regular office hours.
For start-up founders who are married, this is where the wives play a crucial role. In fact, Fearon has his wife drop him off at the office every day. She is the one who gets him out of bed on days when he has his bad entrepreneur days and feels the world is against his start-up. “That is an important stabilizer to have,” he adds.
He also fully believes in working in co-working spaces because of the peer pressure to work hard that this induces. And while one recent entrepreneur DNA spoke to thought highly of accelerators, Fearon does not necessarily believe in them.
Which probably then leans to the conclusion that each and every entrepreneur just has to find his or her own path to success, and that some of the common notions of what start-ups must do to succeed and which may work for many, do not necessarily apply to most. Fearon is an example of this.
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