Biz Influencer: Steve Marsh and the future of data archiving
Smarsh founder and chairman Stephen Marsh is being given the 2018 Sam Blackman by the Technology Association of Oregon on May 10, 2018.
Headquartered in Portland, Smarsh — named for the man himself's email address — provides an integrated suite of information archiving applications and services that help companies protect themselves and manage risk. Slack, IM, Instagram posts, tweets.... companies are learning that everything must be archived in case of a lawsuit, and Smarsh provides that service. Founded in 2001 the firm has 230 employees and six offices worldwide.
"The Sam Blackman Award recognizes executives of Oregon and Southwest Washington-based technology companies for excellence in industry leadership as well as an individual's positive impact in the greater community," said Skip Newberry, TAO president and CEO.
Marsh is a different leader from Blackman. Quieter and more serious in person than the boisterous Blackman, he is, however, as driven and ambitious. He readily admits his influence runs not in political circles but in the world of finance and venture capital. As Portland's tech scene slowly grows up, people look to Marsh for his contacts in the capital world, and his wise counsel. The Business Tribune sat down with him in his office on Broadway..
Business Tribune: Why do you think you got this award?
Stephen Marsh: In the last two years I been more invested in mentoring younger-stage technology companies. And that was viewed pretty favorably, finding executives who are giving back to the local community is something they admire and appreciate. In addition to that there's charitable involvement, I recently have joined the board of trustees for Randall Children's hospital and Smarsh has always given to local charities. Put that with a year where Smarsh has had phenomenal success, it's probably the right time.
BT: What does mentoring look like at this level?
SM: It's often the CEO or founder of the company, but it might not just be the CEO who needs some coaching. These could be small teams so it could be the head of sales, the CTO, whoever is in charge of business development...it spans the organization. As a local executive who understands the Software as a Service delivery model that a lot of people are using, which is what we've done, here there's a lot of relevance. There's a lot of opportunities to give back, to help them learn from my mistakes, and gives these companies and opportunity to grow.
BT: Was Smarsh SaaS (software as a service) before everyone else was SaaS?
SM: We were selling our product as a subscription-based service going back to 2001. No one used the ward SaaS, nobody used the word cloud. You might hear Application Service Providers. We just thought of it as a subscription.
BT: Did it catch on because technology changed?
SM: Some liked to buy it and put it on their own hardware, some liked to rent it out as pay as you go. That continued for several years. But then the SaaS companies started being viewed more favorably by investors because they had this revenue stream and a more predictable revenue model. Once that started to happen more companies started to build it that ways. You have the preference among consumers coupled with higher valuation, and now most companies are software as a service.
BT: Which way is SaaS heading?
SM: It's still SaaS, but more of the underlying infrastructure is not within individual companies' data centers. They're building their service son Amazon Web Services. There are less defensible arguments for maintaining your own data storage. It used to be about security but Amazon, they do a phenomenal job. Over time as a company scales those rent models on Amazon are not always the most economical, but it's a lot easier.
We'd buy incredible amounts of hardware, we'd have people in house managing the electricity and cooling, and it's a lot of work. For most people you don't need to do it. Let Amazon or Microsoft do it, they're getting power at great prices, they have redundancy built in. Typically, it's not the core competency of the company. They want to build products not be managing data centers. Most young companies get it now. Now you have more companies being started requires less capital, fewer people. You can start with a laptop and turn it into a business.
BT: Could starting a software business get any easier than a laptop at home?
SM: The technical barriers have been reduced. Particularly in Portland, it's now easier to raise seed capital than it was. There are more investment funds putting money to work here in Oregon, angel investors have a strong network here. If you have a good idea and want to get it off the ground this is a great place to do it. It's far more difficult to build it into something successful at scale. What we tend to see is people who can build products or applications, but they might not have the resources to build a good business. There's a big difference.
You see a lot of companies being created by engineers coming out of other companies, they start to build great products but they don't have a lot of experience bringing it to market.
BT: So sales and marketing are becoming valuable?
SM: It's as valuable as it's ever been. And tactics that used to work don't necessarily work anymore. When we started Smarsh it was a lot of cold calling and face to face meetings and you could get people to pick up the phone. Now with more digital automation tools there's a lot more emphasis on lead generation and funnel metrics. I think it has taken a lot of organizations' eye off the simple messaging and value proposition. They've gone from face-to-face sales to an almost completely automated machine, but in between you have to have a message that resonates with a potential buyer. That middle ground is where a lot of companies stumble. They can license the tools to fire off a bunch of emails and track people coming to their website and look at all the metrics on their dashboard to see how many people are at each stage in their funnel, but then when they sit down with a prospective customer, they can't close a deal. Or if someone visits their website they don't have any information that resonates with the customer. It's interesting to see it playing out.
BT: What advice do you give them?
SM: In a lot of cases it's the organization needing to understand who their customers are and what the right message is, and they're questions the executives need to answer, it's not a consultant or a third party coming in to do the work. In some cases there's an investment, or a CEO will reach out, say I should speak to you. You get a lot of introductions that way, something more casual. In other cases I might be on the board, in which case there are more. To me, a lot of these businesses are just interesting. Different products in different markets with different customers.
BT: Is Portland's reputation for business cooperation and collaboration still warranted?
SM: Portland is very collaborative. Whatever aspect of the tech community you still find it's very collaborative. Except perhaps Adidas versus Nike versus Under Armour, that may not be that collaborative. If you're talking about the tech industry there's a strong underlying desire to help grow Portland's tech community, and to try to help bring new companies here and to get the industry to where it is self-sustaining. We've had a couple of generations of hardware companies, but not in software. We're not like Seattle with software. At best it's 10 to 15 years of software, and SaaS is even less.
Talent was a big theme, 15 years ago, if you tried to hire an executive to come and work at a tech company in Portland they often didn't want to relocate because there weren't enough tech jobs. Now you have enough tech jobs, second and third jobs in people's careers as they can take comfort that they'd be able to find. And the quality of life that causes people to move here. So you've got people, more investments, and a community of tech leaders who want to help each other. You see it in the TAO, there are dinners and meetings, they're sharing stories about service providers. Everyone wants to help. Everyone is competing but it's not as cut throat as you'd think. Even the investors will make room for one another, they're not trying to push people out.
BT: Would you be so helpful to a firm calling from Austin?
SM: It's hard to speculate. A lot of the companies helping each other out here are in different spaces. I suppose if one of our competitors from another part of the country called and asked for help I probably wouldn't give it to them. Collaborative, not foolish! I don't know if people here are helpful because it's the local community and they know they're going to see someone again. I think they're kind and they're helpful, they don't view other tech companies as a competitive threat. And the more successful companies we have here the easier it will be to have investors in town, and new companies, and recruit people to move here.
BT: What in your management style has worked?
SM: Inadvertently, I became exposed to every aspect of the business. In the early days I did the software development, I knew the platform inside out, so it made it easy to manage the tech team in the years that followed. Similarly, when the tech team took shape I spent more time in the accounting and financing department and learned about that. I think there are these natural cycles where I go around the organization spending my time in different parts of the business, every few months, and it made it easier for me to make decisions about what we should be doing in those parts. I didn't set out to do it but in hindsight it worked.
That said, in every one of those areas, the idea was to hire the smartest people who could do the job 10 times better than I could.
BT: If you became CEO of another company what would your first actions be?
SM: I think the initial challenge would be learning what makes it successful and what would make it a failure. That's my style. I'm generally not the most outspoken individual unless I have a really strong opinion about something. In which case I'm very outspoken.
BT: Do you have a way of motivating people?
SM: There's no trick, if I think you can do better I'll tell you. I have a tendency to focus on things that are not working well. A lot of the way I manage is talking about what is not working and needs to be eliminated. People who require a lot of positive reinforcement don't always get it from me, or I have to be reminded to provide it. It can come across as me as never being satisfied, but it's the way I'm thinking about the business and what needs to be fixed.
BT: What will Smarsh be doing in 10 years?
SM: Realistically speaking we will be larger organization than we are today, in revenue, employees and customers. We archive electronic communications for regulatory, and as the world become more regulated you have more companies that need to keep these communications. Or you get to a point where there's a minimum benefit to keeping all these communications. And on average a customer wants to retain more and more types of content. They started out wanting to only keep email. Then it was instant messaging. Now it's text messages, phone calls, Slack...all these platforms create opportunities for us to grow our business. It could be a sole proprietor and because it's SaaS you're just paying for what you use. Or it could be tens of thousands of people with multiple types of messages.
BT: Did the Facebook Cambridge Analytica scandal wake people up to the fact that everything is being stored?
SM: People didn't used to give out their credit card number for shopping online, now they will share everything. It will awaken people to the fact that their data is everywhere, I don't think it will change people's behavior If your card gets stolen the banks are going to cover the consumer. I don't think there's any incentive to change.
BT: Isn't data useless if it's not up-to-date?
SM: No, because a lot of data is used in legal cases about things that happened years ago. Or you find something about an employee and you go back four years and learn something new.
BT: Who would you call to get something done?
SM: I haven't really gotten involved in local politics. The closest thing is the TAO, they have a group that lobbies down in Salem, I've been to a couple of the advocacy meetings but it's not really me. I could probably make a few phone calls to people who are more plugged in. Most of the people I know are in the business community here and around the country. People I know who have gone on to other companies, and I know a lot of investors at private equity firms. Not so much in the political arena.
Introducing a company to potential investors would be pretty easy, on a local or a national level. That's a product of me fielding a lot of calls, it just happened over 17 years in Smarsh. I built up a pretty good Rolodex.
BT: Do you like all that?
SM: Some say it's a waste of time but there's a lot of value in learning about these companies. You get introductions on every one of these calls. The longer-term residual benefit is of just knowing all these people. It's a powerful and influential network to have.
Sam Blackman Award
The Sam Blackman Award was known as the Technology Executive of the Year award, but was changed after the sudden death in 2017 of Sam Blackman, the AWS Elemental founder and 2015 Technology Executive of the Year.
TAO is a local nonprofit working to build opportunities, better our economy and unify a voice for innovation in Oregon and beyond. A recognized leader in shaping and growing technology and business communities, TAO empowers businesses and entrepreneurs through networks, events, advocacy, resources and more. With over 425 member-companies, TAO's network brings together some of the largest companies in the world, small startups and tech-enabled companies that are using technology to drive growth and innovation. For more information, visit: techoregon.org
Reporter, The Business Tribune
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