Don’t Forget These 3 Things When Starting a Cloud Venture

I’ve been in the cloud since 2008. These were the early days of enterprise cloud adoption and the very beginning of hybrid cloud, which to this day remains the dominant form of enterprise cloud usage. Startups that deliver breakthrough infrastructure technology to enterprise customers have their own dynamic (which differs from consumer-focused companies), and although the plots may differ, the basic storylines stay the same. I’ve learned from several startup experiences (and a fair share of battle scars) there are several things you should start planning for right from the beginning of a new venture.

These aren’t the critical ones you’re probably already doing, such as selecting a good initial investor, building a strong early team and culture, speaking with as many early customers as possible to find product-market fit (PMF), etc.

Instead, here are three of the less-known but equally important things you should prioritize in your first years of building a company.

1. Build your early customer advisor relationships

As always, begin with the customer. Of course you will cast a wide net in early customer validation and market research efforts to refine your ideal customer profile (ICP) and customer persona(s). But as you’re iterating on this, you also want to build stronger relationships with a small group of customers who provide more intensive and strategic input. Often these early customers become part of a more formal customer advisory board, but even before this, you want to have an ongoing dialog with them 1:1 as you’re thinking through your product strategy.

These customers are strategic thinkers who love new technologies and startups. They may be senior execs but not necessarily – they are typically the people who think about how to bring innovation into their complex enterprise organizations and enjoy acting as “sherpas” to guide entrepreneurs on making their products and companies more valuable. I can remember the names of all the customer advisors from my previous companies and they have had an enormous impact on how things progressed. So beyond getting initial input and then focusing only on sales opportunities, build advisor relationships that are based on sharing vision and strategy, with open dialogue about what’s working/not working and where you want to take the company. Take the time to develop these relationships and share more deeply with these advisors.

2. Begin your patent work

Many B2B and especially infrastructure-oriented startups have meaningful IP that is the foundation of their companies and products. Patenting this IP requires the founding engineering team to spend significant time documenting the core innovation and its uniqueness, and the legal fees can run to thousands of dollars. As a result, there’s often a desire to hold off filing patents until the company is farther along and has raised more capital. Also, the core innovation may change as the company gets further into the market and founders realize more precisely what the truly valuable technology includes – or even if the original claims are not aligned with PMF.

However, it’s important to begin documenting your thinking early, as the company and development process are unfolding, so you have a written record and are prepared for the legal work ahead. In the end, the real value patent(s) provide for startups is less about protecting your IP from other larger players — who will always have more lawyers and money than you do and will be willing to take legal action to protect their own patent portfolios or keep your technology off-market — than it is about capturing the value of your innovation for future funding and M&A scenarios, and as a way to show larger players that you’ve taken steps to protect your IP and innovation during buy-out. In the US, a one year clock for filing the initial patent (frequently with a provisional patent filed first to preserve an early filing date) begins ticking upon external disclosure, such as when you launch your product, and you don’t want to address these issues in a rush. It’s important to get legal advice early on about whether you have something patentable, how much work it will be to write up the patent application, who will be named as inventors, and whether you want to file in more than one country.

3. Start your SOC2 process as you’re building MVP

Yes, SOC2. Not very sexy but as time has gone by, it’s become absolute table stakes for enabling early-adopter customers to test your initial product, even in a dev/test environment. In the past, it was possible to find a champion who loves new technology to “unofficially” test your early product since s/he was respected and trusted by their organizations to bring in great, new stuff. But as cloud and SaaS have matured and become so widespread at enterprise customers, the companies that provide these services – even to other startups – are requiring ALL their potential vendors to keep them aligned with their own SOC2 requirements. It’s like a ladder of compliance that is built on each vendor supporting the vendors and customers above them. There is typically a new vendor onboarding process and security review, even for testing out a new product, and these are more consistently enforced than in the past.

As a result, it has become more urgent to start your SOC2 process right away, so you can say you’re underway even as you’re building your minimum viable product (MVP) and development processes. Although it’s much easier now to automate and track SOC2 processes and prepare for the audit (this is my third time doing this, and it is far less manual than in the past) – if you launch your product and then go back later to set up security/compliance policies and processes, it will be much harder, more complicated and under much more pressure from your sales teams to be able to check this box.

There’s no question that other must-dos should be added to the above list (and it would be great to hear from other founders on this). With so many things to consider, it’s hard to prioritize in the early days and sometimes the less obvious things can be pushed for “later”. But as I build my latest cloud venture, Causely, I’ve kept these 3 priorities top of mind since I know how important they are to lay a strong foundation for growth.

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