Yellowfin swims on rising tide
Glen Rabie: Self-funded from the start
Melbourne based Yellowfin has become one of the Australian software industry’s great success stories. Its business intelligence products now have over a million end users in 50 countries.
It has 130 people in offices in the UK, Japan, the US, and the Philippines.
Yellowfin was founded in 2003 by Glen Rabie, then a business analyst with NAB, and Justin Hewitt, who had a similar role at Australia Post. Mr Rabie spoke to InnovationAus.com about how the company came to be, and how it got to where it is today.
“I was part of a large BusinessObjects data warehouse project at NAB. It had a lot of challenges, and we had to build our own end user dashboard products in-house. I thought we should be able to do that straight out of the box. That was the starting point – we wanted to get analytics into the hands of thousands of people.”
Was there a Eureka moment? “We were sitting around having Christmas drink, asking ourselves why this was all so hard and why we were building it ourselves? Someone said If you really thought we could do better, we should just and go and do it. So we did.”
They decided early in the piece to make their products web-based, which was not so obviously the way to go in 2003. “All BI products back then were based on a desktop GUI. That had performance benefits for a single user, but we saw that the web was better for a large deployment. Since then, of course, the performance differentials have pretty well disappeared.
“Part of Yellowfin's evolution has been always keep up to date with technology. The people who work in the enterprise BI and analytics space really appreciate a lot of what we do, because they understand how we have solved many of their problems.”
Yellowfin has been self-funded from the start. Only last year did it take its first external investor, Melbourne entrepreneur Peter Cameron, who took a “fairly small” stake in the company.
Mr Rabie says they have occasionally considered equity funding, but that on balance it has been good to grow organically.
“We have had reasonably good growth. We may have done things differently if we had had a lot of money up front, but a lot of what Yellowfin is today is because we really learned some hard lessons along the way that we would not have learnt otherwise.
“When I look at a typical VC funded business, I see many of them coming up with an early iteration of the product, then all the money is spent on marketing. You don't see the products evolve until they get acquired by someone else.
“We've always had to fight really hard to be relevant and innovative, and we’ve become very good at managing our available capital. You become very good, over time, at prioritising aspects of the business, and thinking about where and how you invest, and where you need to grow.
“I'm actually really thankful for the hard yards. If we had taken a lot of money up front, many of our choices would have disappeared. You're no longer in control of your business if you give away 40 percent in the first year or two.”
Nevertheless, Mr Rabie says that Australia needs a more vibrant VC scene. “When you look at a VC market like San Francisco, those VCs have a ton of portfolio companies, which they can use to network with each other and build businesses.
“Singapore, on the other hand, doesn't have a VC market, but it has a really strong government policy of investing in small startups. It creates hubs that people then become part of, and they can share experiences and grow together.
“That's really what's missing in Australia. There's a lot of really clever people doing really clever stuff, but there's no mechanism, either through private VC environments or through government, that creates these hubs where people are networked together. There seems to be a bit of movement in that direction now, which makes complete sense.”
Yellowfin sells its products largely through resellers and business partners, who operate in over 70 countries. One of its largest partners is Texan enterprise software company BMC, whose successful Remedy 9 enterprise management is all built on top of Yellowfin. Pitney Bowes also uses Yellowfin software in some of its products.
It has customers in all industry sectors. It is strong in government – except in Australia. It is an all-too-familiar story. “We don’t do a lot in Australia to help local software vendors sell to government,” says Mr Rabie. “You have to be on a procurement board to get in, and the cost and effort to get onto a board is substantial.
“Given the trade treaties that we've signed, there's no way that you can give preferential treatment to Australian companies to sell to government. But we could make it easier to get onto procurement boards. We should be equal in terms of the choice, but how much software do Australian companies and governments buy that's Australian made? Not a lot.”
Mr Rabie says his biggest challenge is maintaining the level of innovation which he believes has been the main reason for Yellowfin’s success.
“We are fortunate that people are constantly looking at new ways to discover data. This has kept business really interesting.
“The other big challenge is growth. We went international early and most of our revenue has always been from offshore. At first we could barely sell in Australia, but we had some good luck in the US, and we found a great partner early on in Japan.
“This gave us revenue, but it also really stressed us in terms of thinking about how to be a global business very early on, when we probably weren’t really ready for it.”
He says Japan has actually been easier than the US. “They both consider Australians really forthright, and up front, and we are. We call a spade a spade. The Japanese respect that, but in the US it is harder.”
Yellowfin has had some government assistance. The biggest help, says Mr Rabie, was the Victorian Government’s Trade Grant, which helped the company get into Japan in the early days. “We have also used the R&D grants, which are effective, at some level.
“The question I always ask is whether it makes you do something that you wouldn't otherwise have done – and I don't think the R&D grants do that. The government can be helpful, but it wold be great if it were easier to navigate all the paperwork. At one time we stopped applying for grants, because the time and the complexity was just getting too much.”
Does he have an exit strategy?
“You'd be mad not to think about it. We've certainly had quite a few offers along the way. mostly when we were small and people thought they could buy us cheap.
“Do we go for a listing? Where would we do it? Does it make sense? Do we still have the fire in our belly to keep going and enjoying what we're doing? We still love what we do.
“You've got to hit key metrics, and grow and have fun along the way. Ultimately, everything is built by people, and the main things maintaining our culture. We want to be somewhere where people want to turn up to work, and who care, because that is what drives a business forward.”