Orlando Sentinel: Seeking maturity: Orlando’s tech startups need to grow up

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Dayne Williams, CEO of PlanSource, was featured in The Orlando Sentinel. Text from the piece is below and the full article can be found here.

Seeking maturity: Orlando’s tech startups need to grow up
Marco Santana
April 4, 2016
Copyright © 2016, Orlando Sentinel

The lakeside deck on Richard Daley’s Orlando home serves as a reminder of what a successful tech startup can become.

It was here in 2004 the serial entrepreneur and four others – with his trusty chocolate lab Avis – hammered out a startup idea that grew into one of Orlando’s biggest recent successes.

Called Pentaho, the company last year sold to Hitachi Data Systems for more than $500 million, leaving Daley with a windfall he hopes to reinvest in another new business soon.

“You start off with a leap of faith,” Daley said of jumping into the startup world. “You have to believe there is a need in the market that you can fulfill. Sometimes people have a tendency to overanalyze and overthink so they never do it.”

Early stage startups, typically a few years old or less, can grow up to become the larger businesses that boost a region’s economic development by employing a large number of people. Pentaho, for instance, still employs more than 100 people in Central Florida. But they eventually have to move past the edgy startup stage and mature into more sophisticated companies.

Other local successes include Orlando’s PlanSource, which now employs 400 nationwide and about 180 at its downtown Orlando headquarters, and Celebration-based ecommerce software company Channel Intelligence – acquired by Google for $125 million in 2013.

Most startups fail, with some surveys putting the number at three in four, or higher. Kauffman Foundation reported in 2010 that nearly three in five shut down within five years, though that number could include acquired companies.

Stereotypically, a startup can include few employees but a fair amount of hoodies, craft beer and product-based meetups.

Daley, 53, says he could retire but building a business is more interesting. He said the startup image is enticing for many young entrepreneurs, but they must be ready to mature and move past that stage.

“If they don’t grow and make adjustments, yeah, they won’t make it, especially if they are hoping for investment from outside sources,” he said. “There is a maturing process in terms of even the culture. You don’t want to change from the fun and passion but there has to be little bit more of a grown-up environment.”

In addition, entrepreneurship has become more accessible, meaning more can pursue ideas with an eye on starting a business, which means more failures.

So why do business groups, civic leaders and investors continue to pour money and time into startups?

Experts say the future Pentahos of the world could be little more than an entrepreneur’s idea today.

“A company has to start somewhere,” said Donna Mackenzie, who leads the Starter Studio accelerator in Orlando. “You hear stories like Dell computers, which literally started in a dorm room. We also have some real world examples we can point to.”

The most prominent example is Facebook, which has grown to become a social media giant and was once little more than a college student’s effort to create a communication platform for students.

Now, creator Mark Zuckerberg is a billionaire looked at as a leader in the tech sector with a network that boasts more than a billion active monthly users.

Channel Intelligence CEO Rob Wight created a second startup after that called MyList.

But MyList soon moved out of Orlando, an illustration of what some say is an intelligence drain that happens if enough resources don’t support startups.

“We have a problem with keeping our smart and knowledgeable talent,” Mackenzie said. “They are going to other parts of the country.”

As more employees spin off startups, the region grows, said Dayne Williams, CEO of Plansource.

The company last year landed $70 million in investments for its cloud-based technology and projected an expansion that would add about 150 people, many in Orlando.

Williams said the more companies that succeed locally, the better it is for a tech community’s reputation.

“As more companies get their start in an area, they infuse the community with new energy and ideas, which is good for everybody,” he said.

But not everyone believes the hype.

Dennis Pape, who runs Catalyst coworking space in downtown Orlando, said the focus should be on companies that are actually growing rather than those that just started up.

He said he can’t blame the general public for its skepticism when the community seems to oversell itself, then fail to reach its own established expectations.

For instance, when Canvs coworking space in downtown Orlando was set to debut, media reports published estimates that said the space would help create 5,000 jobs. Last year, when the tech conference OrlandoiX was growing, they claimed they would attract 100,000 people downtown.

OrlandoiX instead reported that it had sold 5,600 tickets; Canvs hosts 99 companies, are mostly small startups with few employees. Two companies there employ more than 10 people. A few others have grown at Canvs and moved to bigger spaces, like Fattmerchant and flexReceipts.

“The Orlando startup community has way over-sold the importance of startups in the short term and spun a story that has not come true and will not come true,” Pape said. “Scale up takes time and energy.”

Last year, Pape started VentureScaleUp, a program for young companies poised to grow.

When Daley sold Pentaho, he stayed on for several months as a consultant. However, he has since moved on to start a fourth business, Corvana, a software company in its early stages.

Just like Pentaho, Daley’s latest analytics startup began with him, four partners and a dog at his lakeside home. This time the chocolate lab is named Sandy.

“Today, I’m at the office sitting here with no shoes on,” he said. “In five years, I’ll have khakis on and a blazer. Everyone goes through that.”

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