After a hard, 6-month evaluation of a little company in Richmond Hill, they came back and said:

“Alright, we’re going to select you . . . and we’re nervous as hell”.

Every startup has its watershed moments. Win, and you’re Napoleon after Austerlitz, basking in triumph. Lose, and the watershed may instead be your Waterloo.

For CiRBA, a virtualization management vendor just north of Toronto, that decisive moment came in 2005 as the company vied for a significant piece of business. Like le petit caporal, the company was outmanned and outgunned by its international competition.

As President and CEO Gerry Smith puts it, the “small-ass little company” found a way to win, and importantly, prove to itself and its investors that it had made the right choice in steering towards the burgeoning virtualization market.

35 customers and 20 million dollars in funding later, the company is fighting on new fronts. Each battle, Smith says, is still critical.

From professional services to product company . . . but which product?

Smith, who founded and sold Changepoint, has lead CiRBA since 2005. In that span, the company has gained international recognition, befriended the giants it once fought, and wrestled with the challenge of leading a young product in a nebulous market.

As he is quick to point out, 9-year-old CiRBA had begun to productize its intellectual property long before Smith’s arrival.

Under founders Riyaz Somani and Andrew Hiller, the bootstrapped company was looking to leverage its expertise in configuration management into a product.

But by late 2004 the virtualization goldrush had begun, and CiRBA was extremely well positioned to take advantage of it.

Turning ‘well-positioned’ into CIO Magazine’s #1 Vendor to Watch isn’t as simple as changing a business card.

“[a] software product typically needs capital, and running a software business has higher risk, but higher reward. You need to buffer [that risk] with capital, with patience, and with [investors] who can say “you know what? It’s going to take longer before we can see money coming in the door.”

The company did a great job focusing on data centre hot spots—virtualization and consolidation. As a result, IBM’s global services organization [were] standardized on the CiRBA product. —Derek Smyth, Partner, Edgestone

Money and Patience

CiRBA recently completed its third round of funding, a $12 million investment from Sigma Partners.

Smith’s arrival at CiRBA coincided with its first financing. Six months after that initial investment, the company changed direction and chose a strategy that would let them attack the virtualization space.

“After 6 months (believe me it was a lot of hair pulling, discussion, and meetings) we re-focused our configuration tool to be an analytical and control engine for the emerging market of virtualization.”

Gerry put his organizational savvy and rolodex to work, leaving the technical details to his capable executive team.

“What I did was bring the discipline of saying, ‘lets continually meet, a couple, three times a week, [and have a] serious evaluation of where we’re going and [how to point] our product at the market.”

“[a] software product typically needs capital, and running a software business has higher risk, but higher reward. You need to buffer [that risk] with capital, with patience, and with people who can say “you know what? It’s going to take longer before we can see money coming in the door”

If you write it, they will come

Andrew Hillier, CTO

Detailing the arcane complexity and simple ROI of transitioning a data centre from physical to virtual was a challenge placed on CTO Hillier’s shoulders. The reaction to his whitepaper, backed up by CiRBA’s product suite, told Smith that they were going in the right direction.

He invokes a classic TV ad to describe the scene: “I’m exaggerating – but just to make the point, it was like that IBM ad years ago where the guys create a web site and they’re all standing around looking at [it] saying, ‘well, wonder if we’re going to get any business now that its live?’ and then they see, 1, 2 wrrrrrrrrr (the numbers start spinning).

CiRBA’s approach was compelling and interest was strong. Now they needed a customer or three.

CiRBA beats Goliaths

CiRBA’s first pitch saw its solution go up against powerful global systems integrators for a large piece of business. Smith sums up the result:

“After a hard, 6-month evaluation of a small-ass little company in Richmond Hill, they came back and said ‘alright we’re going to select you . . and we’re nervous as hell’.”

The giants play nice…
The systems integrators community that CiRBA beat out took notice. And many have since partnered with the company. (visit CiRBA’s partner page for more)

… and help CiRBA’s evolving strategy
Partnering wasn’t an overnight coup, however. Smith refers again to his reliance on weekly sessions that help shape the organization’s longer-term goal, even 6 months into a plan of action. As the company gained momentum, CiRBA’s leadership focused on reaching out.

“One of those strategic session [told us] lets put a lot of emphasis and support to winning over these systems integrators, let’s create a business model that supports them, [and] doesn’t compete with them.”

You find yourself in the perfect opportunity for any venture capitalist: large identifiable market with identifiable market need with proven IP and a team that coming together that’s done it before. —Derek Smyth

CiRBA today. Pedal to the virtual metal.

When Smith joined CiRBA, the company had fewer than 15 people. Today, it numbers over 60—and plans to almost double in size this year alone.

Growth in employees, customers and product development, fueled by its recent $12 million funding and industry recognition, signal the company’s shift from startup to mature software company. Smith knows it can be difficult transition.

“I have watched companies move extremely fast—and lets translate that into, ‘spend piss-pots full of money’ [when] they haven’t yet justified the spending of money on people, on space, on marketing, on websites, and everything else.”

CiRBA’s challenge is to jump quickly but not blindly into the opportunity before it.

“We’ve built an application that adds enormous value and meets a huge demand in the market, so our challenges now are shifting from creating an application and making sure that it hits the market, to refining that application to make sure it’s exactly in the cross hairs ”

A . . . B . . . CiRBA

It’s a helluva lot easier to hire great people when you show how successful you’ve been in raising capital from stellar VCs, when you’re winning awards in the market, when you have large customers, and you offer competitive compensation.
– Gerry Smith

Smith calls CiRBA a ‘9-year overnight success’. His immediate goals are adding personnel and refining both the product and the operational processes that will help them capture their market.

When asked what the future holds for the company, Smith is honest and positive.

“Is there an opportunity to be the Cognos of data centres? To have this intelligent framework that guides and helps virtualize data centres? Absolutely. The fact is, [we’ve] got a runway in front of us, and lots of air under the wings, and we’ll go hard. I think we have a good opportunity to be that company.”

While CiRBA hasn’t quite crossed the chasm, its human and intellectual capital, girded by Smith’s relentless strategic focusing, suggest that it has the grit and leadership it needs to fight its way through.