Q&A: SADA Systems CEO On Why He's Investing Millions In The Cloud And Not Playing It Safe
SADA Systems, a Google, Microsoft and Facebook partner based in Los Angeles, will pour $11 million into its business this year, a massive investment meant to capitalize on the booming cloud industry.
As the company's physical footprint, customer base and staff expand rapidly, CEO Tony Safoian is maintaining the posture that drove his success: investing in new technologies, surrounding himself with the most-skilled employees he can find, and focusing on midmarket customers.
Safoian founded and scaled SADA by taking risks, first bringing to market Google's fledgling Apps product, then doing the same with Microsoft Office 365. He's not about to play it safe now as the cloud market explodes.
To that end, SADA is competing with name-brand tech companies for talent, and even launching its own application development efforts.
Safoian told CRN no one knows the limits of the market, and he's eager to find out how large the business can become.
You're investing $11 million in the business this year. Why so much?
The market is growing at a tremendous clip. I'm always driving to have our growth at least track with the market itself. As the pie increases, we're growing at least as fast as the pie. If not, we're losing market share.
We're perpetually investing most of our profits, recurring revenues, in our business in tremendous ways. We've done that for 10 years straight.
But this is a time to really overinvest, and we can do that because of the speed of the market. What customers and partners expect us to do is ship things faster than ever.
This is the most we have ever invested. But we need to. We surpassed $72 million in revenue this year and are projecting $108 million in revenue in 2017.
What is the market potential for cloud-focused solution providers?
We have the inside track on the opportunity. We have information others don't have because of so many customers, and our intimacy with Google and Microsoft. So we're spending our money, while sticking to our principle of not leveraging debt.
Only 5 percent of the current IT spend is in the cloud. There's billions just to be cost-shifted and migrated. And that's not taking into account the kinds of things the cloud is enabling people to do that they couldn't do before, like making accessible to everyone the computing power to help sequence genes. We really don't know what the size of that opportunity is. What's curing sickle cell anemia worth to the market? Nobody knows.
What types of customers are you focused on winning?
A lot of our competitors have pulled out of the midmarket, and I think that's a big mistake. The midmarket is perpetually underserved.
Almost none of the companies that develop the skill set and capabilities we have stay around. A lot of them look to get acquired and then they want to go upmarket.
There are a lot of players in the SMB space. But CIOs in the midmarket are challenged every day with problems by line-of-business leaders. The tools are available, but they have no one to turn to. They need help and that's a massive opportunity.
Hiring looks to be a big focus, and you're even poaching talent from Silicon Valley?
We're always developing talent internally. We're looking to bring the best people over here, and some of those people are expensive, and for good reason.
So that investment we're making, it's going into people, into leadership. People don’t leave great jobs, move their entire lives and make a big bet on SADA if the economic opportunity is not at least table stakes.
I've just established a new role: head of talent acquisition. That person came from Live Nation. We're trying to find the best in the world.
It's an expensive proposition, but getting the best people is the only long-term sustainable competitive advantage.
What's the relationship with Facebook been like?
Bringing Facebook Workplace to customers is going to be another major growth area for us and we're investing heavily in developing that business. We're really excited that they're sending people down here to L.A. this week to meet our staff during our 'all-hands' week [meetings with employees].
We've been using the Facebook product internally now for a while. It's the perfect cross-platform tool and it also has the best mobile interface and functionality I've ever seen. It's a pleasure to use.
We've been using it to record the elements of our all-hands meetings this week. We've never done that before.
SADA was one of Google's first partners. Where's the Google business going now?
Nobody sourced more revenue to Google than SADA last year. We're No. 1 for G Suite sourced revenue, No. 1 for Maps, No. 4 for Google Cloud Platform [GCP} globally.
The biggest growth area there is with GCP, the IaaS and PaaS resale and services. Now that Google has merged G Suite with the GCP sales organization, everyone will be selling cloud.
But Maps is still a huge focus for us. We have 668 Maps customers, and that business is generating $20 million in recurring revenue. And we're going into product development around Maps with our new Atom application, which is another exciting area for growth.
How about Microsoft? You were one of their first Office 365 resellers as well.
With Microsoft services, one exciting area is delivering big complex projects that will grow on the heels of the Azure IoT Platform.
Another growth area is Dynamics 365. Microsoft recently made Dynamics not just a CRM, but really true financial management in the cloud. They've consolidated all the pieces of those ERP solutions they bought in the last years. This is a great solution for the midmarket. There's nothing else like it.
What do you see driving growth for cloud partners down the road?
There's technologies that partners and customers don’t understand the impact of yet: machine learning, analytics, Internet of Things, amazing platform solutions. I can't wait to see what happens with all of that.
We know there's market demand, we know it's very early and painful and rapidly changing so we have to be nimble. Before the leap in the technology adoption curve, you're not making money. But you have to invest because if you wait until the market is proven, it's too late.
I want to discover where my ceiling is. I'm only going to get this opportunity once in a lifetime, and it's not about the money, but about maximum market impact. What is our potential? I really want to discover that.