Big Win Potentials in B2B Cloud Transition [Podcast #89]

Hello and welcome to the Startups of London Podcast. I’m your host Ozan and the founder of Startups of London. Today, I’m joined by Mahdi Yayha, founder of Ori. ori.co, based on my basic research, is a cloud solution that sits between your application portfolio and your distributed infrastructure. But I think we need Mahdi to tell us more about what the solution is. So yeah, welcome to our chat.

Thank you, Ozan. Happy to be here.

So let’s start about what the product is, who your ideal customer is, and what the solution that you offer is so we get a better understanding of the business and the business model, and then we can get into the other details.

Absolutely. So we were a distributed cloud platform, basically. And we work with large enterprises that are on their cloud transformation journey. So our customers are banks, manufacturers, and retailers. And most of these enterprises basically manage distributed infrastructure. So they manage infrastructure and multiple public clouds in their own data centres, sometimes in branches, and offices, and so forth. And obviously, managing all of this infrastructure is extremely complex. And then running applications. And some of these enterprises run thousands of applications in order to run the business. running these applications is a very expensive and complex process, especially as they start moving more and more towards a cloud-native architecture. So we basically offered them a platform, which is distributed cloud or a global cloud and allows them to manage their infrastructure orchestrator applications and monitor that and manage the lifecycle of that moving forward in a very simple and easy way. So what used to take eight to 12 months of preparation and deployment with acid could take a day basically.

Amazing. So basically, you’re a B2B-oriented solution. Is that fair to say?

Absolutely, yeah. So we only work with businesses, and we only work with enterprises.

Amazing. And if you could kind of walk us through what you mean by those applications so people have a better understanding. Because the reason I’m asking this is, as entrepreneurs, it’s really important to diagnose a problem. And then once you find the problem, once you know there is a demand, you can actually create a solution around and you can solve problems. But you cannot solve the problem of lack of demand. Right? So you need to start with a position of “Okay, this is the market, there is an opportunity here, there’s a demand here.” So for us to understand that, can you perhaps give us an example? What are these applications? What is a client without giving any names if you don’t prefer, and how it works with your case?

Before I get to that, I think I kind of agree but I guess it depends on what you’re building because sometimes you might find a better way of doing something that not necessarily people have identified it as a problem. And then you build a technology that improves on something that others have not identified. So you kind of creating a solution for a problem that maybe you only see or maybe a problem that is going to exist later on. So I don’t think it’s as black and white as that. There are a lot of ups and downs, I’d say in building a company and actually exploring the column space that you’re you’re building with. And as you know, a lot of startups or companies start with a certain problem and then realize that it’s not actually the real problem that they’re building against. And that changes over time. So I wouldn’t say it’s as linear as that. It’s very much. It’s a chaotic process.

It definitely is, it definitely is. No disagreements there.

So on the applications, I mean, large enterprises use, you’re talking about, as simple applications, as the accounting software, as their HR software, all the way up to how they manage the databases. You know, some open source software that they use to manage databases, infrastructure, and so forth. And these applications are in the hundreds, sometimes in the thousands, in some of the large financial services, institutions that we talked to, and they could be frontend applications or front office applications. So applications that their employees use, like in a bank, for example, the software that the employees in a branch use to input the customer data, and so forth. That’s an application and behind that, there is a number of applications that power this application as well. So it’s a chain of complex applications for them to actually run their business operation in general.

And historically, most large enterprises, especially the ones in the financial services space, have basically built their own on-premise clouds, their own private clouds, or even their own on-premise data centres. And a lot of these applications are built in a way to run on this infrastructure. And with the move to microservices architectures and with the move to cloud-native applications, a lot of this is changing. So either the suppliers of the applications are changing how they’re building their applications is becoming more cloud native. Or the bank is starting to adopt more of a cloud-native architecture for a variety of different reasons for compliance, to compete as well, because a lot of the challengers, financial services are the challenge of FinTech are in the cloud. So they basically can compete more than traditional ones. And for cost purposes as well.

So with all of this move comes a lot of complexity. And we come in with a solution to all of these different enterprises and say, “You really don’t need to deal with this complexity, we abstracted away from you because we automated a lot of the manual process that you have to do to basically become cloud-native and to manage your applications” basically.

How did you come into this commodities problem? Did you have a background in a company that’s within your target market, for example? So how did you stumble upon this to start with?

I’ve been in infrastructure, and cloud infrastructure specifically, for about 15 years. So my first company that I started was a wholesaler network. And basically, I spent a long time in data centres networking between infrastructure and working on enterprise-grade infrastructure.

So hold on for a second. Have you been working as an entrepreneur for the last 15 years in that case? 

Yes.

Amazing, amazing.

So I started my first company, 15 years ago, I was 20 years old. And I grew that to about $200 million per year in revenues. And I learned everything about infrastructure and how global data centres work, and basically, the backstage of the internet.

Well, that’s quite something. 

And, you know, so I experienced firsthand the rise of the cloud and how cloud computing changed how we deal with infrastructure and how basically applications, in general, started changing their architectures and adopting the cloud and so forth. A few years ago, I came across a number whereby you really realize that only 3% of global IT workloads are in the cloud still. So there’s 97% of global IT workloads are not in the cloud yet. That means there’s a huge growth potential for the cloud itself, you know, and the cloud is big. Now we know this, it’s a multibillion-dollar industry.

It is like a giant tsunami wave.

Absolutely. And then if you look at where these IT workloads are, they’re mainly in large enterprises. And then I looked at the spend. And last year, enterprises globally spent about $4 trillion on managing IT infrastructure that is outside of the cloud. With the growth of the cloud, and this spend starting to move to the cloud, this is where I saw an opportunity to basically build a platform that would capture both solve the problem for the enterprises and capture that spend, that is only going to grow from here, basically.

So tell us about the building parts. What was your personal role? Also, looking at it from the perspective of a founder, everybody has different assets. So there isn’t a one size fits all recipe, I’m afraid for the entrepreneurs listening to us. But in your case, after you’ve made that decision, seeing the opportunity in your research, how did you start building this? What components of it were done by yourself? How did you go about building the team? The investments? Tell us all about it. 

Oh, well, that’s a long process, I’d say. 

Let’s talk about the first year. How long has it been since you launched Ori?

We’ve been building this company for about three and a half years now.

Amazing. Talk us through the first year, what was it like? How did you start that? Because I think that the most difficult part is to get started with these things and put them on the right track. 

Yeah, absolutely. So some of the team that started with already were a team from my previous company. So we were working in my previous company, and then three of us from my previous business basically decided to start Ori. That was the beginning of it. So we’re three people. And we set out to start raising, it was our seed round, in order to scale the team. Basically, as you do, you start talking to the different VCs in the UK. And then we met Episode One Ventures, they were the first VC that invested in us. I got along really well with Paul, I still do. He’s on our board and he’s a really good friend. Paul used to work at Cisco. In the old days, he was an executive at Cisco. So when I was talking to him about the problem and what we’re trying to solve it and the technology, it kind of resonated with things that he used to experience at Cisco so he saw the big value in what we’re doing. So they led our seed round. And basically, that was the beginning. So we raised money from there and started scaling the team.

For a long period of time, the team was very much technical, as you can imagine. So engineering was a big part of what we do, and it still is, I mean, we’re an engineering-driven business. But it took time to build the engineering team, and to find the right people as well. I would say, and I hate this term, but a lot of people put us under the banner of deep tech. I don’t agree with the stamp, because I don’t understand what deep tech is.

But building a technology-driven business, I would say, especially in the UK, in Europe, it was a bit challenging to find the talent. A lot of the talent in our industry was not in the UK, was not even in Europe, as well. So that was quite challenging to find the right people, and actually, find the right team that could work together and build this.

It’s an interesting tangent if we can go there for a second. So where was the talent in Europe? Or where is the talent in engineering? Where do you look at the world map? What do you see?

So, most of the talent in the field talking about technical infrastructure solutions, US has more talent than here. That’s changing, I would say, and there’s more and more people now in our space. But the access to talent, especially if you’re early stage — you’ll have the really senior engineers, really senior technical leads, probably in the UK, or different places in Europe. But as an early stage to basically have access to certain talent that you’ll be able to onboard from day one you will find more in the US space, I would say.

Back to you. You got the funding, you have a core team. You’re an engineering-focused company, which is not aptly described as deep tech. So how do you go about finding customers? Because that seems to be the biggest bottleneck for a lot of businesses, once you get investment?

And let me tell a quick, short story of mine. Before we answer that question. I don’t usually jump in. But I think this is very relevant here. This was before the pandemic, I was at an event in central London. Lots of founders. And I met this guy. And we were talking about the startup, what he was doing, what I was doing, et cetera. He told, “Yeah, our offices are upstairs.” I asked, “How many people are you?”. He said, “We are 15 people.” “How many years have you been working?” He said the startup is like two years old. And then I asked, “Okay, do you have any customers?” He said, “No, we haven’t launched yet.” Okay, I understand that the idea of growth before profitability, in theory, makes sense. But sometimes people take it to such an extreme, I think. And, the perspective the world has had on that has kind of shifted of the de vivre stuff and other things coming to a bitter end, perhaps.

So in your case, how did that story go?

We spent a long time on the technology, figuring out how it works because we simplify it for the customers now, but it’s a very, very, very difficult problem to solve and put together. And spending time on finding the right people that can solve this problem for us. And at the same time building the solution. And finding a customer that will find value in it took a long time, I would say we had a lot of ups and downs in the business. And also we used to think our customers at the beginning were in the telco network space, so we were working a lot with a variety of different telco providers, you know, your mobile operators. Then eventually we realized that it was not, because we were trying to sell to the enterprises through the telcos. Because the telcos offer certain infrastructure, like networking infrastructure, to the enterprises, we thought that is a good channel for us. And that’s a way we can basically build our solution. But that didn’t work out. And we had to change quickly, we had to change even how our platform works. We had to change how some of the architecture works as well, in order to go directly to enterprises, and then to go to enterprises, we had to find the right channels. It’s very difficult to sell to a large bank.

It’s difficult to get the conversations started. I’ve been there I had a B2B solution in the visual learning space, and even if you have a product that they would fall in love with, typically takes a year and a half. And then so both in terms of the time duration, the urgency and finding the right people and getting them interested in the conversation is by itself a huge task, in my opinion.

Of course, and there are times when you, like any other startup, go through phases where you can’t see where this is going, you can’t see the light. But then just keep at it and try different aspects and eventually, things align.

And this year we are in that stage where we have a healthy pipeline of customers, we have a solid product, we have a very solid team that is basically delivering on this product and so forth. It takes time.

It’s amazing. So what was the first big win for the business that you kind of celebrated internally?

To be honest with you, the first contract we won was about a million pounds. And that was one contract with one customer.

Yeah, that’s cause for celebration.

Exactly. And that was quite a good achievement, I would say. I mean, the team did fantastically to get us there.

The dopamine and endorphins. Yeah, I can imagine, after hearing good news.

Absolutely. And this kind of proved the market we’re in because it’s a huge market. You’re not talking about a SaaS solution where you basically need thousands of customers to actually compound and create revenues. It’s a big market. And if we do this well, and if we continue growing this way, and working through the right channels, it’s a big, big, multibillion-dollar business and a multibillion-dollar market. You know, it’s what exciting about this.

It is. I’m excited for you, hearing this story, because that’s kind of the entrepreneurship bug, right, getting excited about this, and really, maybe risking a lot of things just for the shot of building a big company. 

Absolutely. Yeah. And I like the enterprise space because you can– I like big contracts.

So let me ask you, I think what you just said kind of ties neatly into my next question here: How entrepreneurship is perceived in the UK, versus, let’s say in the US? Maybe the other way to ask this question is, what do you like and what do you not like about the British startup ecosystem?

I like London, I love London, I love living in London, I don’t think I’ll move anywhere else. Even though, as a startup, especially as an entrepreneur, most people, you know, start in London, they raise a bit of money, and they move to the US. And I never thought about doing that. And I never thought of actually wanting to do that. Because I think there’s a lot of value you get here as well.

And also, there’s a lot of value you get from a place where you think differently, and you act differently, and you do things differently as well. And I see that not as a negative, I see it as a positive of being in a place where it’s growing.

I would say a lot has changed throughout the years as well, like, there are hundreds, if not thousands, of startups in London now. And if you look at it, especially in Europe, London is the place to be to build a startup. The infrastructure here is fantastic, even better than in places in the US, from technical infrastructure, all the way down to how you register a company and build a company, and all of this is so easy, it’s so simple to do that, you know. The banking system makes it really easy for you to actually build the company here. So I’d say there are all the components to actually build the company in this place. And I mean, I owe a lot of what I’ve built in general to London and being in London. So I have a lot of, I would say, a lot of positive feelings towards being in London and London in general.

But that being said, there are certain challenges, like I mentioned earlier, with the type of company we’re building and the industry in so London is well known for service-driven businesses for FinTechs, for SaaS type of companies, and so forth, and there’s a lot of those, and there’s also big successful ones that came out of London, as you know. But for technology-driven businesses, or I don’t want to use the word but deep tech, that was challenging, I would say, from finding the talent, but also talking to the right investors, because a lot of investors in the ecosystem in London are very much used to the FinTechs, the SaaS models and so forth. So they can basically put you on that Excel sheet and do their calculations and so forth.

But when you’re starting with a technology-driven business, and you’re building something based on tech as in “Look, there’s a problem in how we do things in applications, and we’re gonna solve it by doing 1-2-3.” That was quite challenging to get the message across to some investors and to actually get them to understand the value of what we’re building and where this could be, where this could get to basically. And I would say that one of the weakest points of being in London is if you’re actually building a technology-driven business. It’s a challenge and it still is to even to this day, you know, and more so in Europe, I would say Europe is even worse.

It is. London is kind of a gateway. It feels almost like an arithmetic average of the US and the EU.

Yeah. And if you look at the number of startups that are in our space that is very few here. I can count on maybe one hand that are in London that is building technologies that are like in our space. But there are hundreds in the US that do that. And all of the big startups that came before us that built cloud technology businesses, like HashiCorp and others, they all came from the US.

Yeah, yeah. This is the reason why we have built Startups of London, basically, I think the startup ecosystem in London should be 10x its current size now. I think it can be.

I agree. And I think all the components and like I said, the infrastructure needed to build a company here is very good, it’s very easy. 

It is incredibly easy to get a company started, it’s easy to communicate, it’s easy to transport, and you can get the finance and insurance and other stuff done. The tax system is quite easy compared to a lot of places, sometimes people like to complain about it, but I know they haven’t seen the worst of it. So it is actually really good.

But once you’ve done all that, so you have a company registered, you have a semi-flexible team and so on, it is really tough to sell in this market, in my experience. Not just to sell products, but also kind of selling to the investor, right, selling the idea, making them excited, especially if you’re kind of trying to push the envelope that’s pushing the boundaries, taking more risks, coming up with a perhaps nontraditional business model.

And when I say traditional, I’m not talking about the bakery. But as you just said, like a SaaS and FinTech now, it’s been traditional, because it’s been going on for 10 years, right? But if you’re really trying to push the boundaries, and doing something really incredible, high risk, high reward, now, people tend to approach that with a sense of scepticism that I think is beyond the boundaries of healthy scepticism. That’s kind of my take on this.

I think also this is due to– if you compare with VCs, particularly in the US, a lot of them came from an operator background. So they were either in a startup, or they were in a large company operating something, especially if they’re technology-driven investors. So they understand, they have engineering backgrounds, they were an engineer at one point. So they kind of understand the technical problem that you’re actually solving.

If you think about the majority, I’m not saying all of them, because I’ve met some fantastic VCs here. And we do have some fantastic investors with us as well, who fully understand what we’re doing and supporting it. But the majority of investors in the UK, they come from either private equity, or investment banking backgrounds, and that’s why there’s a big drive towards FinTech, I would say.

A better understanding of money rather than the technologies described.

So Mahdi, if I might ask you, do you think you as an entrepreneur because you said it’s been 15 years, right? It’s a long time. Do you still feel like you’re growing as an entrepreneur, you’re becoming better every year? 

Of course, every day, every day you get better I would say.

So, tell us. Let’s excite future entrepreneurs. In what ways, in which qualities do you think you are becoming better and growing as a direct result of working as an entrepreneur, as opposed to, let’s say, working in a large corporate setting?

It’s quite difficult to define it, I would say, but I think you’d become better at viewing situations and understanding how to look at data in order to make a decision. Sometimes I look back two, three years ago, I thought, “Oh, I know, a lot.” And then I’m like, “How did I make that decision?” You know, because I have more understanding of data now. Do you know what I mean? And that’s something that compounds over time.

And sometimes you do it deliberately. Sometimes you don’t do it deliberately. But because you’re exposing yourself to many types of situations as an entrepreneur, especially if you’re starting and you’re forcing yourself to be in so many situations that are completely uncomfortable for you, but then you just have to go through them. That teaches you a lot without you knowing and it compounds over time. The more you expose yourself to uncomfortable situations, the more you realize that you’re getting better at things, you’re getting better at making decisions. You’re getting better at noticing patterns, therefore allowing you to make better decisions, you’re getting better at even talking to people. You know, how you say things, how you mention and how you explain things becomes better and better over time, I would say, and therefore it makes you a better person on the first level, but also makes you a better operator or a better leader, I would say.

It does. I mean, in my experience, I just would like to echo what you said, you almost become like a machine with superhuman powers. When it comes to making decisions compared to the average, let’s say, because you make so many decisions throughout the day. Some of them are small. Some of them are decisions that you make once a month, and some of them are decisions that you make once a quarter. And you learn to approach those questions and those decisions differently. Like you have the habit. So you think you take your time, you consult people, and you have a better understanding, I think this is the best thing about being an entrepreneur, you understand how little you know, yet you also understand how to acquire that new bit of knowledge before you make the decision. Would you agree?

Yeah, absolutely. And it’s not just about being an entrepreneur, as a business operator, you just become better as a person in everything you do.

Because it’s just in a way, it is such a good feedback loop that you either get good or you don’t survive. Whereas in a corporate setting it’s perhaps a different dimension.

How many people are you as a total team right now? 

At the moment, we are about 30 people. 

30 people, that’s quite sizable. Are you looking to make any new hires? What are you looking for?

We’re always recruiting engineers. There’s always a space for a good engineer with us. But we’ve literally started going to market properly this year. So we’re, we’re growing the sales team. We’re growing marketing, and hiring senior marketing people. So we’re starting to grow the go-to-market machine at the moment. So a lot of the hires that we are making and we’re going to be making the next 12 months are in that space, basically. 

Amazing. So for people to reach out to you it is ori.co. And it’s been wonderful having you, an insightful chat. I had a blast. Thank you for coming on.

Thank you. I enjoyed it. Thank you.