keystone: global expansion, first stop the uk – with graeme frost
DESCRIPTION
At a UKTI-sponsored event, Graeme Frost recounted for the audience his journey from Wang to Keystone, Cadabra and Brilliant Software, including the how’s and why’s of Keystone’s success with legal practice management software in the UK. Their late 90’s search for VC funding hit at the start of the tech boom which enabled US expansion. Graeme shared his pro’s and con’s for NZ software companies targeting the UK vs the US and Australia, and his recommendations for getting started in the UK – including leveraging the powerful and practical resources within UKTI, NZTE and KEA.TRANSCRIPT
GRAEME FROST • Over 30 years IT, over 20 years developing software
for world markets
• Developer à Designer à IT Manager
• 7 Years Wang New Zealand
• 12 Years Keystone
• 5 Years Cadabra
• Now Brilliant Software
BACKGROUND • MBO of software divisions from Wang in 1990 – 12 staff
and around $1.5m revenues
• Comprised of Travel and Legal Practice management software
• Had major share of NZ legal market (the “big 5”) • Russell McVeagh • Bell Gully • Simpson Grierson • Rudd Watts (now Minter Elision) • Phillips Fox • 50 smaller firms.
BACKGROUND • Legal software based on proprietary Wang VS
hardware
• Evaluated replacement products to represent
• Best was judged to be 40% fit
• Saw opportunity to develop Keystone…
• Needed to solve NZ problem • Realised the NZ legal market management vision was
well ahead of world market • Had a world-class visionary “on staff”
A CLEAR DIFFERENTATION • Targeted large firms
• Top 6 NZ, Top 20 Aus, Top 100 UK, Top 250 US • Global firm ready
• multi currency, multi firm, multi machine. • Design Target: Clifford Chance.
• Vision was to make firms more profitable • A Front Office rather than a back office accounting system
• Online Time Recording • Fee Earner Billing
• Targeted the partners not Finance • High Price tag • Cultural change • They get the profits!
A PLOTTED HISTORY • Started development in early ’93
• Initially funded from income from existing customers and custom development.
• Started showing customers and prospects (NZ, Aus) part finished software in late ’93
• Unsuccessfully tried to raise investment funding
• Sold system to Phillips Fox late ’94
• Lost 2 other NZ deals to US based competitors ‘95ish
• Started “making noise” in UK in ‘95
The Keystone Solution
• What are we? We develop, market and support highly-specialised application software for the professional services market.
• What are we about?
Our products and services are designed to build profits for our customers - through online time capture and billing; improving productivity and client service; and enabling efficient management practices with real time forecasting, budgeting and business intelligence.
A PLOTTED HISTORY • First sale in UK 4 months after first arriving • 4 sales within 12 months • First Australian sale late ‘95 (Mallesons) • First Angel investment ‘96 $400k • Steady flow from Australia over next few years • Rest of New Zealand over next few years • Started looking for VC funding in UK early ‘97
AIM MARKET LISTING • September ‘97
• Reverse Listing
• £4m for 38% of company
• Tech boom just beginning
• Raised over £20m during next 5 years
• Purchased US Subsidiary March 2000
US MARKET STRATEGY • Acquired company had 300 medium sized firms using
old legacy practice management system • 50-100 Keystone Targets
• Acquired Company had 150 larger firms using Business Intelligence system • Firms had already shown themselves to be visionary • Leverage relationship for Keystone • Take BI tools to the rest of world.
• Combine existing sales staff with Keystone Kinghitter (ex Australia/NZ)
• We were beating US based competitors around the world.
US MARKET REALITY • One Keystone sale • No imperative to innovate • Partners wouldn’t engage • Parochial • Kiwi business ethic didn’t wash! • Subsidiary cost too much and didn’t deliver. Our worst decision!
AUSTRALIA
Pros • Travel Cost and Time Low • Time Zone differential
small • Medium sized market • Easy to visit/relocate to • Possible to service from
NZ • Legal and Accounting
similar • Similar Business innovation
Cons
• Australians don’t like buying off Kiwis
• Lesser business ethic • Employments costs high • Really need to employ
Australians to sell • Medium sized market
UNITED STATES
Pros • Huge Market • Time Zone – some
overlap • Tend to be behind in
business innovation • Employ at will makes
employing people easier
• Parochial • Less efficiency imperative • Geographically dispersed • Travel Time medium • Time zone – some overlap • Big travel commitment to
service from NZ • Visa required to work
there.
Cons
UNITED KINGDOM
Pros • Large Market • Like buying off Kiwis • Compact market • Good base for Europe • UK T&I / NZTE very helpful • Strong NZ community • Selling Price higher • Attractive for NZ staff • Behind in innovation • Similar business ethic • A great “validation” market
• Travel Time long, cost a bit higher than US
• Time zone difficult • On ground costs higher • Big travel commitment • Visas required to work there
but many kiwis qualify
Cons
UNITED KINGDOM – RECOMENDATIONS • Commit to the market. • Talk to UK Trade and Investment early • Research kiwi connections (use Kea) • Meet Trade Commissioner in NZ House • Find a consultant to be UK presence • Trade on kiwi innovation and business ethic • Use kiwi novelty value (e.g. all blacks, NZ wine) • Commit to be there often (1 week in 6 min) • Relocate as soon as practical. • Relocate kiwi staff in preference to local staff where
possible
BRILLIANT SOFTWARE ADVERTISEMENT! • Brilliant Software is all about world class custom
software development • Target technology companies • Iterative, prototyping approach • Only super star employees mean quick enterprise
quality product development • Innovative ideas are free!