In Redwood City (CA), we meet CEO and Founder of Highfive, Shan Sinha. Shan talks about his story how he came up with the idea and founded Highfive, how the current business model works, as well as he provides some advice for young entrepreneurs.

INTRODUCTION

Martin: Today we are in Redwood City in the Highfive office. Hi, Shan, who are you and what do you do?

Shan: Hi, Martin. Thank you very much for coming by. It is very nice to meet you. My name is Shan Sinha. I am the founder and CEO of Highfive. We build an all-in-one hardware software video and web conferencing tool for businesses of any size. We are based here in Redwood City.

Martin: When did you start this company and what made you come up with this business idea?

Shan: We started the company just over three years ago. I’ve been in the world of communication and collaboration for a pretty long time now, going on 12, 13 years starting at Microsoft where I worked on a couple of products there. I loved Microsoft. I started a company in collaboration space backed up by Google. A Google, I was running Google enterprise apps where we were bringing cloud-based email to companies and so where the idea for Highfive was a long way of getting to, the idea of Highfive. Where the idea for Highfive came from was a bunch of things that we saw on Google. Google is a phenomenal place. They communicate differently than every other company in the world and what we ended up seeing at Google was a company that decided to use video as their primary way to talk to each other. Most companies still use conference calls and the telephone to talk to each other but at Google we use video. All of that technology that enabled that was made through a bunch of homegrown systems that we had created there. When we saw that, we were convinced that every other company in the world would communicate the way we did at Google. We decided to start Highfive based on that inside and that is what led to what we are doing now three years later.

Martin: Can you walk us briefly through the beginnings of Highfive? Once you have left Google what the first two or three months look like?

Shan: It is a good question. The first few months when we stumbled on to our observation that there is a big opportunity here there are a bunch of questions that we asked. The first question we asked was, well, what was it that made video really work in that environment in the way that we saw it at Google. The numbers were staggering. Google was 40,000 people. The question that we asked was what made video work across all those 40,000 people? Just to put it to perspective, at Google we were doing 20,000 video calls every single day. The average person was using video one to two times a day. The first couple of months were spent figuring out what that key insight was, how we were going to structure our product, what was going to be important to our product, what was not going to be important almost as critical. The first two or three months we spent time securing some initial investment. We put some definition around what product we are going to build and on recruiting an initial team. When we ultimately left Google the first two to three months was going from two people, my co-founder and me, to around eight people. Just within the first couple of months, we secured some initial funding from some great investors here and we really just focused on product definition.

The thing that is interesting and, I think, maybe for everyone who is listening to us right now, the thing that was interesting was that we had this insight for a product and we put together our initial plans within those first two to three months. Three years later, we are working on substantively the same exact problem. After three years now what was amazing to see is that those ideas that we are working on in a small room together have now led to a company that is now 70 people. We have got over a thousand customers now and we are essentially working on the same idea that was a genesis for the company so that we have not had any major pivots or anything like that. The first few months were critical for laying the foundation for what we were ultimately going to create.

Martin: Shan, how hard was to raise the money?

Shan: It is a good question. I was fortunate where a couple of prior successes and being associated with Microsoft and Google ended up being a significant asset in raising capital. For us, raising some of that initial capital was not terribly challenging. A lot of that was our history and the work that we have done in the past. The second part of it was this was a big market. Business communication, as one of these 8 billion dollar markets now, and many of the products are very, very old, outdated, and antiquated. I think there was a lot of interest in bringing your products to life, creating new companies in that category. It ended up not being too much of a chance to raise some initial capital. What I would say is as you continue to need more capital down the line, raising money was always challenging. We ended up having our share of learning as we were going through that process as well.

BUSINESS MODEL OF HIGHFIVE

Martin: Good. Let’s talk about business model of Highfive. Shan, what are the typical customer segments that you are targeting?

Shan: Highfive’s business model is very simple. We build an all-in-one video conferencing and web conferencing device for businesses that they can use to deploy video all across their company. We are all familiar with the types of problems we deal with the work. You walk into a room trying to get together with a group of people trying to get work done and inevitably, in every single company someone says why are we burning the first 15 minutes just trying to get people connected? People are trying to plug cables, they are trying to get their screen on the TV, and they are trying to get somebody dialed in. It turns out the first 15 minutes of every meeting generally end up in a mess. The reason why we are increasingly distributed is people are remote, we have multiple offices and everybody is just trying to get work done. The tools that we have available to do is that we are all designed for a very different world. Highfive simplifies all that.

Highfive gives companies a way to bring easy, simple and affordable video to everyone in their organization, conference rooms, mobile devices, laptops and other desktop computers. The way Highfive works is very simple. We have a very simple hardware device. This is it right here that we built. You attach it to a TV. It is like plugging an Apple TV. It is like a device that you might use at home. We have a cloud service that people sign up for it. Ultimately, it takes just a couple of minutes to set up. We target today small to mid-market businesses so companies between 50 and 1000 people. We make it very easy to try, buy and use. We sell the device for an initial one-time upfront fee. We have a service plan available for companies to subscribe to it. We have a couple of different service plan packages that companies can use depending on what features that they need.

Martin: And how are you different from other web conferencing companies like skype or other solutions to solve this problem of having like remote communication by a video?

Shan: It is a good question. There are many options that people have. The interesting thing that we have observed is that, regardless of all the options that people have, inevitably the thing that people keep coming back to is that the beginning of every meaning still tends to take fifteen minutes to get going for some reason because not all of it works. The big differentiator that we have stems from an observation that we made back at Google that led to the formation of Highfive. Most of the tools out there like the ones you are referring to, Skype and Google Hangouts and all of that, were designed to support people working at their laptops or at their desktops. Skype specifically was designed for grandparents to talk to their grandchildren in our personal lives but they were not really designed for the needs of us at work. At work, our requirements are unique. When you think about people at work, what ends up happening is you have groups of people that are in the office and you have groups of people that are remote. Those groups of people in the office tend to go into a conference room to work together. The people that are remote, they might be working from home or in a different geography and they need to connect to those groups of people in the conference room. The thing that makes Highfive unique is that we bring together in conference room experience with a user experience for people that are outside of that conference room so that everybody can very easily get connect together. The big difference is that we bring together the physical in-room experience with the people that are mobile or working from remote locations. No other product does that effectively, affordably or as easily as we do. We put everything together in a great user experience to make it easily used. That is ultimately, what makes us different.

At the large end, there are many traditional incumbent companies like Cisco and Polycom working here. All their products are antiquated, they are outdated, they are massively expensive and they are just unapproachable for most companies that are just trying to get work done.

Martin: How does it work normally for a small company that is buying your products? Are they only buying for one office or are they buying for the whole company for connecting international office?

Shan: The pattern that we have seen over the course of the last year is that we started shipping our product in January (2015) so we have only been in market for 9 months now. One of the interesting things for us was that we spent two and a half years really building a product that made sense for businesses. The pattern that we have seen is typically a company will say, “Let me bring Highfive in for a team of people and what we will do we will outfit a couple of offices where that team is distributed.” As that tends to work, what would end up happening is that they will tend to roll out Highfive more broadly across their organization. The thing that we have been excited about is that companies have been responding very, very favorably to the overall user experience. They are giving us high marks for the ease of use and simplicity. People are able to join calls without having to go through all of the complexities that people run into. We have got over a thousand customers now. We are processing only a million minutes a weak of calls. Our largest customers are deploying hundreds and even thousands of users now within their organizations.

Martin: What have been the major challenges for you? Was it really understanding the problem or finding a good user experience or was it more technology point of view?

Shan: There has been a bunch of challenges that we had to solve along the way. I think we are probably still at the earlier phases of working throughout those challenges. We are just starting to go through our growth and scale phase right now but the biggest challenges that we have had to solve a kind of stem from a few things:

  • One is that we have had to solve the problem of bringing something that is hard to build, hard technology and to bring that into an end – user experience that is easy to use. The thing that is unique about our particular product is that the category feels like something that should just be easy. I want to do a call with a group of people. I just wanted to work. It turns out that just in that call what you are actually trying to do is maybe fifteen different things and all of those different use cases have to be woven together into an easy to use experience. That has been one big problem that we had to solve.
  • The second big problem is that the technology infrastructure has to It has to be reliable. It has to be something that is rock solid and in order to do that there is a lot of engineering required to make all this work well over the public internet.
  • The third problem is more of a user behavior problem that we have to solve. What is unique about Highfive is that we are asking people to work in a different way and figuring out how you evangelize that new way of working. You should use video when you have typically been used to using conference calls. How do you encourage and drive that user behavior change is a whole set of problems that we have begun to get good at but continued to have more work to do there. When we think about what makes Highfive a hard business to build it boils down to hard technology that has to be easy to use and you have to drive user behavior change. The good news is that when you get all that right you actually enable a brand new change inside companies. You enable that new change in the way that people work. That part is most exciting whenever you see that business is fundamentally working differently than they did before.

Martin: Shan, when you look at the communication network once you built a small company, is it only closed so that means from office A of the same company I can only call office B if it has the same hardware from you installed? Or is it also that I can combine with my Skype account and some other people that are using your hardware and software?

Shan: It is a good question. We are built on open standard. We built our product on top of the standard called WebRTC. The great news about the WebRTC is that it is a new standard that is being built into platforms all around the world into all different products. The way that we approach the ability for people to talk to each other regardless of whether they have our system is to take advantage of that standard.

The way that Highfive works is if I happen to have Highfive in my conference room and I wanted to talk to you, Martin, in Germany, what I could do is I could send you a link and even if you don’t have Highfive hardware you could just join from your laptop or mobile device by opening up that link. Click on that link and you will be in a video call with us.

The user experience is one that can support all of those types of scenarios because

  1. It is cloud-based;
  2. It is built on open standards.

You will be able to join calls directly from a set of web applications that we built that you will be able to access wherever you are.

Martin: Imagine, I am buying your hardware and install it in my company and after maybe twelve months or so there is some kind of issue with your hardware are you then responsible for the maintenance or are you sending somebody to solve the problem or is it me who should fix it or buy a new one?

Shan: No. We have warranties and guarantees for customers so that they can buy Highfive and if anything goes wrong with the devices that you have in your offices we’ve got a support team that can take care of all issues. The interesting thing about Highfive is that unlike previous generations of hardware companies when you buy a piece of hardware it does not really change after a couple of years.

One of the interesting things about Highfive is that we are primarily a software company but we are building a piece of hardware. In addition, the nice thing about being a software company is that we have adopted all the best practices of how software companies work. We have automatic updates. Every time we push out a new release, every single person who has Highfive or who has Highfive installed in their offices will get all of that new functionality. We push our releases very frequently, generally anywhere from every two to six weeks. We have designed our hardware in a way that it can automatically be updated and take advantage of all the new functionality that we are releasing. Your product will always get better. It will automatically be improving over time but if you do run into issues, you just work with us and we will take care of it all.

Martin: How hard was it to design the hardware and find a supplier?

Shan: This was my first company where we built a piece of hardware. This is my fourth startup company now. I did three other startup companies, they were all building software. But this is the first time that I got involved in building a piece of hardware. For anybody who is contemplating building hardware, internet of things is a common theme these days, what I will share with the folks based on our learning is that while it is easier than it has ever been to build a hardware-based product it’s still hard. Moreover, it took us nearly two years to go from concept when we had even a napkin sketch idea of what we were trying to build to something that was fully production grade and ready to be manufactured. It turns out that all of the problems you have to solve along the way, they just take time. Anytime you are discovering an issue, it is a six-week turnaround before you can build a new version of it. As a result any mistake you make along the way will get fell down the line because of the time required to iterate. There’s a lot of learning that we had around being able to pull together and build the device particularly those ones connected to the internet and particularly one that needed to be affordable, easy to be used and reflect the margins that we need to be able to operate a business. We have been successful. I think it creates significant differentiator for us. Ultimately, it was the user – experience that customers needed.

Martin: Where do you perceive the market will go in terms of conferencing systems?

Shan: I think what you are seeing is that there is a general transition away from the way that conferencing systems worked before. Conferencing systems tended to be special purpose, big iron types of products that customers had to customize and deploy. These are products from companies like Cisco, from companies like Polycom. When it comes to business communications these are the companies that were building products. For today’s world, they just require too much customization, too much deployment costs, too much complexity to manage and as a result, they have not been able to be deployed very broadly.

I will give you a statistic that we like to think about. There are over 50 million conference rooms in the world today and only one million of them have been wired with video. Most of them have nothing but a TV screen and a speakerphone in them. Our bet is that every single one of those rooms will be wired with video. Cisco and Polycom just do not have products that you can deploy at that kind of scale because they are either too expensive or too hard to manage. Software tools are not going to enable you to put video and all those conference rooms either. What we have found is that the market size is enormous for a new generation of products. I think customers are creating tools to work better. People are frustrated and not happy with tools like WebEx and GoToMeeting. They are looking for a new generation of tools to do better. I think we are in that category.

Where we see the world going is that our bet is that video and conferencing is going to continue to be a significantly growing market. People are more distributed. People are looking for new ways to connect. They have mobile phones and devices that they need to connect with their co-workers from wherever they are. They have broadband connections everywhere. The tools that exist today that people are using were all invented in a time before all those things were realities. I think what you’re going to see over the next several years is a set of tools that emerged that are designed for today’s world where we are connected from everywhere. They assume that we have high band connections; they assume we have smart phones in our pockets. They are easy to use and they are lightweight. You can just walk into a room, click a button and be connected to the group of people that want to talk to you.

Martin: Shan, it seems that currently you are only building intra-companies communication networks. Are you also planning to do inter-company networks? Either imagine you are going on Linkedin searching for some people that you thought would be worth that you thought you can sell or buy something from them. You both check: “Am I in the Highfive communication network. Yes. We are. Let us have a video check and make a transaction virtual.”

Shan: What we tend to find is that most people are looking for more ways to communicate, not less, because oftentimes what you really want to find is the right form of communication for the situation. Sometimes an email might make sense, sometimes an instant message might make sense, sometimes a text message might make sense and sometimes a phone call might make sense. What we find is that the way that we have developed Highfive is that people can talk to whomever they want. For example, one of our customers, Cloudera, is using Highfive for recruiting conversations. We want to recruit somebody into the company and it is a way better to do a video call than it is a phone screen. The way that Highfive works is that a recruiter can send the customized link for their candidate and a candidate can join the conversation. You get a much richer initial conversation when you are able to see them and so. What we have created allows people to communicate with people both inside their company and outside the company but the thing that is most important about the way we think about the world of Highfive is that we want to give people the option to use video, all those situations where email or a phone call does not quite make sense and it does not quite make sense to go travel and meet somebody at person. Recruiting and initial screens are a great example of that. Another great example of that is that I might be working with a partner, I might be working with a design agency, I might be working with a marketing vendor, and I might be working with the supplier. We talk to each other every day and we would be much more effective if we could just see each other. Highfive enables that because of the way that we have architected our system. We have maintained the security that you need for people inside your company as well as giving you the ability to talk very easily to people outside your company.

Martin: Shan, how did you acquire the customers and how hard was it especially with the first 10 or 15 customers?

Shan: That is an interesting story actually. Before we had any product we knew that it was going to take us a while to build our new technology. What we did was we decided to go and start talking to customers right away. The reason we did that was to go learn about how big our market was and what value proposition we needed to be selling to our customers. The thing that we found was that the response was overwhelming. Everybody was looking for a solution. The way we found our customers ironically was before we had any product. The first version of our product, without exaggeration, was a PowerPoint slide or PowerPoint Tech that had a set of mock-ups of the product that we were intending to build. What we would do is we would go and reach out to customers directly, oftentimes just knocking on their doors and asking them if they are interested in our product. It turns out that customers ended up being very, very interested. Our first 15 customers essentially came from that effort. They just waited for us to build our product because they knew that what we were building was what they wanted. The way we found our first 15-50 customers, in fact, was through this effort of reaching out and trying to look for customers before we actually had any product. The first version of our product was a pure mock-up of a set of capabilities that we were only imagining being built. A couple of years later we finally have all that built. I think that was a good indication of how much interest we were getting from the market.

Martin: Are you currently only having a direct sales force or are you using also distribution patterns?

Shan: It is a very good question. It is a very hot topic for us right now internally. Today we have largely been selling purely direct. We have a sales team that is handling all of our business today but most of the interest that we are getting from customers is largely inbound and it comes over the website. We are exploring a number of different options for how we continue to distribute and certainly, distribution partners are one of the things that is potentially part of that equation.

Martin: And the direct sales are they currently only focused on the U.S., or is it really like international?

Shan: Today we are primarily signed to the U.S. but most of the companies that we sell to have offices overseas and so what they are doing is they are buying Highfive and setting Highfive up across their offices around the world. We have been deployed in over 55 countries now. People are regularly doing calls from all around the world.

SHAN’S ADVICE TO ENTERPRENEURS

Martin: Shan, you started like four companies. What advice can you give to new entrepreneurs so that they make less error?

Shan: That is a good question. This is my third startup company. I am sorry. This is the third startup company that I have been a founder of. I was an early engineer at my very first startup company.

First of all, I think making errors is part of the process. By definition, I think if there is one thing that I have learned is what you are doing, as a startup company is something that has not been done before. It is unreasonable to expect you not to make any mistakes. The way I think about the world is that your goal is to make different mistakes and mistakes that you have not made before and ultimately keep learning through that process of making mistakes.

I think the biggest lessons that I tried to carry with us into Highfive number one is focus on being fast, focus on making decisions quickly because it turns out that the number of decisions that can truly sink your company are truly be disastrous is very, very, very small. It is not a zero but the number of decisions that are truly either irreversible or something that you cannot recover from tend to be very small. The faster you make decisions and the faster you go and try something ultimately makes the difference between whether you are going to succeed or not because every time you make a decision and try something you learn something.

One of the pieces of advice I give to folks when they are recruiting their initial teams is to look for people that can execute. There is often times a tendency to go and try to find the smartest person who has great pedigree. That can be very valuable but if they cannot execute it turns out that certainly in the early stages, and by early stages I mean the first several years, thinking about your strategy and thinking about a sort of high-level challenges in your company are 5% of the problem. To give you a sort of the best illustration of that we came up with our product concept 3 years ago. We are still working on it. There have not been material changes to what our core strategy is because we have been validated along the way. We got lucky that the ideas that we had turned out to be the ones that match pretty well with our market. At the end of the day, what we needed were people that could execute that can bring something to market and have the mentality of solving problems and getting something over the finish on. When you are recruiting people, one of the big pieces of advice that I give to folks is to find people that can execute and get things over to finish on.

Another big one that all highlight would be is how you think about competition. Oftentimes, I am an angel investor now at a number of startup companies. Sometimes you talk to founders, there is a tendency to be worried about what competition is doing. And one of my prior investors had a great saying: “You cannot control what competitors are going to do. You can only control what you are going to do.” If you can keep your focus on customers, focus on solving the problems that they need, by definition you were competing. Doing things as a reaction to what competitors do is always a bad formula because 9 times out of 10 you’re not going to fail because a competitor went off and did something but it is going to be because you didn’t execute against an insight or observation or something that you knew about your customers.

Focus on your value proposition, focus on your product, find people that can get things over the finish line and really think hard about what your value proposition is, and keep moving fast making decisions and learning. Those are probably the biggest lessons I always take away. I have a saying inside my team where if you do not have data then go and try to get it. If you have no way to go get that data, then make a decision and go because otherwise you are not going to learn. I think that embodies many of those characteristics that I was describing.

Martin: Thank you so much for sharing your knowledge, Shan.

Shan: Martin. It was very nice to meet you.

Martin: Next time when you are thinking about starting a company, focus on execution. Thank you so much.

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