Seattle startup looks for customers in the cloud
These are the questions that drove Seattle software developer Kory Gill to leave an almost 20-year career at Microsoft and start his own online data-storage company. For years, Gill has sought a Web-based storage solution that would safeguard his priceless family photos, home movies and other important digital data, but never found a single solution that addressed all his specific needs.
“If these are irreplaceable files, you need to have the same type of insurance for your data as you would of any other asset, like your home or car,” said Gill, who often shared his frustrations with friend and fellow Microsoft programmer Marius Nita.
So last June they founded Newline Software, with the goal of giving their customers a more flexible, cost-efficient and “green” alternative to what is currently offered by the major players like Microsoft, Google and Amazon.
Gill hopes to pioneer the term “eco-digital preservation,” which he said refers to a way of storing data that is both environmentally friendly in that it uses less power, and more economical for customers. Newline Exact is the trademarked software Gill and Nita plan to debut in the upcoming weeks on their website 0xDA.com – the coder term for a hard return, or “new line” on your computer keyboard.
According to Nielsen Online’s 2008 statistics, 220 million Americans were online, which represented about 72 percent of the overall population. With the Obama administration pledging $7.2 billion toward expanding broadband access throughout the U.S., Gill said he anticipates there will be a growing need for data backup. Gill has based his business model on being able to average 100 customers a day and has built in the potential for scaling to a million.
In order to provide for that kind of infrastructure, the Newline secured an initial Series A funding round from friends and family, which Gill described as “comfortably” over the minimum amount of $250,000, but under the $1 million maximum.
“So now that we have the business funded, I think one of the next hurdles we’ll have is just how do we reach our target markets? How do we get customers to know about our product and how do we basically market it and get people to try it, to sign up, to use it and to pay for it?”
Steve Duplessie, an experienced entrepreneur and leading expert on the cloud computing and storage industry, is all for the underdog, but said they need to have a superior technology that gives them an edge in the fight.
“Unless they (Newline) have an application advantage … it’s going to be very difficult to compete in a commodity offering,” said Duplessie, the founder and senior analyst at Enterprise Strategy Group. Duplessie added that the manufacturers of computing infrastructures, such as disk drives or microprocessors, will always have an advantage over those companies that merely package services on top of it.
Joslyn Faust, an analyst at Gartner who specializes in marketing strategies for small and medium-sized businesses, said startups like Newline need to target which potential customers are most likely to buy their product or service in the least amount of time.
“If you are spending money and effort trying to market to everybody then by default a lot of the people in your pipeline are going to be people who will never buy from you, because they have no need,” said Faust, who added this is a challenge that affects most information technology startups..
Joshua Baer knows first hand the challenges of starting a cloud-based company, having successfully launched two web-based email startups in Skylist and OtherInbox, and said the key is to form a distribution partnership with a significant player so that your product gets noticed.
“The whole value of the partnership is that they have the door already open and you’re just walking through it,” said Baer, who conceded he is skeptical of Newline’s ability to get 100 signups a day, something OtherInbox only achieved after partnering with Yahoo. “One way or another they’re going to have a customer-acquisition cost and it’s probably going to be on the order of $10-50 per person. So if they want 100 customers a day that means they’re going to be spending $1,000-5,000 a day to make that happen.”
What do you think of Newline? Will it be able to find the customers it needs to compete with its larger rivals? Leave your response in the comments below.