Focusing nearly 100% on recurring revenue growth. If cash is king in a startup, revenue is his queen, particularly revenue paid by our customers to basically do the same thing for them every month.
John McDonald serves as the CEO, Chairman and President of CloudOne, the first company to offer SaaS and Virtual Private Cloud delivery of IBM Software products. Before his work there he was an executive at IBM, serving in various roles in IBM Software Group for over 20 years. He is one of the founding members and on the steering committee of the Cloud Customer Standards Council, a group with over 450 member companies, founded by OMG for creating standards in cloud computing. He is a member of the Association of Information Technology Professionals, the IBM DeveloperWorks Advisory Council, the Industrial Advisory Board for Computer and Information Technology at Purdue University, and an original IBM Champion for Rational in 2011, 2012, 2013 and again in 2014. John earned degrees in Management Information Systems and Computer Information Technology from Purdue University in 1992 and 1995 and lives with his family near where he grew up in Indiana.
Where did the idea for CloudOne come from? What does your typical day look like?
The mission of CloudOne is to take over the operation of IBM software for the world’s best companies, so they can focus on what makes them great. That mission comes from observations made by some of CloudOne’s first employees that the cloud and Software-as-a-Service would one day revolutionize the IT business – and we are working hard to accelerate that revolution every day.
My core job as CEO is to find and recruit the best people to work with us, and to ensure that CloudOne has the financial resources necessary to grow as fast as it can. That means my day is mostly spent coaching my top leaders, talking to our key partners, customers and stakeholders from IBM, engaging top talent in how they might join our team, and working with our directors, investors and potential funding partners in positioning CloudOne for growth through good financial management and capital investment.
How do you bring ideas to life?
No idea comes to life without tapping the best skills on our team, and collaborating with them to vision and execute the idea. Every new initiative begins with a discussion amongst the key players, and then putting the process and measurements in place to see it through.
What’s one trend that really excites you?
Companies have been working hard to connect every person and every device together through the Internet, from televisions to automobiles to smart phones to wearable computers. What is about to happen next will be truly amazing, and that is to layer intelligence on that network of things so that our lives as humans become more adaptive, more productive and more effective. For example, with the processing power in the latest infotainment systems in the latest automobiles, it’s not far-fetched to see a day when your car knows you’re starting to nod off because of your driving patterns, finds the nearest Starbucks at the nearest exit, orders and pays for your favorite drink, and directs me on-screen to the drive-through window to pick it up. Or perhaps the hotel I’m staying at while traveling knows I have landed, dispatches their shuttle van on time to the door of the airport, and when I arrive I receive a message on my phone with my room assignment. When I wave my phone in front of the door to unlock it, I find that the TV screen in the room is a terminal showing all my DVR movies, my e-mail, and waiting voice and video mail messages, all without me having to touch, type or say a thing. This interconnection of things is just the foundation for a smart layer of intelligence on how those things interact and interact with humans.
What is one habit of yours that makes you more productive as an entrepreneur?
Every morning I try to arrive at the office before everyone else and reflect on the day before and the day ahead. This lets me plan all my actions better, and adapt more easily when the unknown challenges of the day arrive.
What was the worst job you ever had and what did you learn from it?
My first job was walking up and down the rows of parked cars at a Meijer picking up trash and cigarette butts with a broom and dustpan. It taught me to appreciate those who labor outdoors, and to look for job roles and education that would keep me inside!
If you were to start again, what would you do differently?
I would gather more startup funding before launching the company. This is hard to do outside of places like Silicon Valley and Boston where there is ample capital and a climate of funding startups, but it would have allowed us to succeed more quickly.
As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?
I work really hard to spend significant blocks of time with the people on my team that I rely on the most. This is tough, because the temptation is to thin-slice my time between everyone equally, so as to ensure I have a handle on everything and not leave the impression that I am micro-managing a person or function. But the time I spend is focused more on their fears, hopes, wishes for their lives and our company, and once we’ve had those deep conversations I’ve seen people reach greater heights immediately. For me it’s such a joy to learn these things, because I can then understand better where people are coming from, and weave them more effectively together as a team.
What is one strategy that has helped you grow your business? Please explain how.
Focusing nearly 100% on recurring revenue growth. If cash is king in a startup, revenue is his queen, particularly revenue paid by our customers to basically do the same thing for them every month. We call this “mailbox money” (as in, “go to the mailbox, get the money.”) By setting aside one-time revenue pops, or even deep-dives on profitability of business (as tempting as that is), we can grow our top line quickly and then provide the time and “oxygen” to the organization to improve profits and collect special one-time revenue bonuses.
What is one failure you had as an entrepreneur, and how did you overcome it?
There have been many failures at CloudOne, but my favorite failure was our entire initial business model. What we do is help IBM software customers deliver that software securely and capably back to their own organizations using virtual private clouds, flexible licensing and managed services. A big part of that model is a unique arrangement we have with IBM to “rent” their software on a monthly (or hourly) basis to customers, letting them sample it in small quantities, or match demand more accurately to cost. When we first started, we thought that existing IT services companies would rush to add our ability to provide software in this way to their own offerings, allowing us to avoid hiring our own sales force and growing the market for us exponentially. It was a failure of the highest order: we signed up over 100 partners, but none of them ever sold anything. We learned that they didn’t know how to sell what we offered, and we didn’t have the resources to train them. So we lost probably a half million in capital and nearly a year of time trying to make that model work before discarding it in favor of hiring our own sales team.
What is one business idea that you’re willing to give away to our readers?
In relation to our business, the biggest need I see right now is for consultants who are available to small- to medium-sized businesses to help them understand what resources they have in the way of data, and how to tap those resources for competitive advantage. Right now you can make a lot of money doing this.
Tell us something about you that very few people know?
I wrote two business history books, one about Indianapolis companies and organizations that have gone belly-up (“Lost Indianapolis”) and one on a particular company called Burger Chef that is long gone (“Flameout: The Rise and Fall of Burger Chef”).
What software and web services do you use?
What do you love about them?
Twazzup gives me a single page view of everything that’s on social media about our company. Uber is just such a simple and revolutionary way to get around town completely through an app – I probably use this 1-2 times a week now. FollowUpThen is a simple cc/bcc system that lets me set ticklers for e-mail messages I send – I probably use this 10-15 times every day. Google Maps is so outstanding because it unifies the map with the full Google search, as well as real-time traffic and user-reported road issues – there is no better way to get anywhere. And the Adobe Creative Suite is where I live whenever I’m creating something for our company.
What is the one book that you recommend our community should read and why?
Atlas Shrugged by Ayn Rand. I know that’s a classic that many have read, and even more have an opinion about, but at it’s core, it points the way for entrepreneurs to drive ahead without worring about what people think, and to not let those who destroy instead of create drag you down.
What people have influenced your thinking and might be of interest to others?
People should read some of the earlier letters and writings of Ronald Reagan to understand more about what makes America so great for business and how to avoid some of it’s pitfalls. Obviously Ayn Rand has influenced my thinking, too. But I’m totally unafraid to say that Jesus has influenced my thinking the most. I am a firm believer that serendipity is not at all just luck, but God’s way of encouraging you to stay on the path you’re on. When things don’t “click” like they should, it’s a sign you may have wandered from the best road that he has plotted for you.