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CEO Spotlight: Nicolaas Vlok, Vision Solutions Inc.
By Angel Mehta, Managing Director, Sterling-Hoffman Executive Search
South Africa is a continent and an ocean away from Silicon Valley – not exactly the birthplace you’d expect for one of the world’s few remaining stand alone software companies with greater than $100M in revenue. Nicolaas Vlok, CEO of Vision Solutions, chats with Sterling-Hoffman’s Managing Director Angel Mehta about lucky breaks and empowering people.
Angel Mehta: What was it like starting a high-tech company in South Africa? It doesn’t strike me as a hotbed of high-tech activity.
Nicolaas Vlok: We started our business right after a lot of changes took place in South Africa. A new democracy and government came into play. South Africa was and in ways still is pretty much an isolated country, not just due to the past political climate that was at least changing, but also because of distance. One of the biggest challenges when you start a business and you specifically want to sell or license intellectual property to a global marketplace is location. South Africa is ten hours or so away from its closest real markets in Europe and even further from Asia and the US if you travel by plane. So, it’s hard when you start out a business to cross those boundaries. From our perspective, we were in a small market and we had some ideas to grow the business outside the South African market place. It took a little time, but we’re a global business now – maybe half a percent of our revenue comes from South Africa.
Angel Mehta: Building a $100M company is hard enough, even when the ecosystem is well-established, like in Silicon Valley. What were some of the early challenges you had around, say, financing?
Nicolaas Vlok: We started out funding it ourselves, basically bootstrapping it for a long time. We were students and we could afford to leave the profit in the business and to self-fund it for the first 4 years. When we hit 100 employees, we decided to go test the public markets in South Africa. The growth to $100M was organic and in part, through acquisitions. We successfully integrated seven acquisitions in seven years. With hindsight, we’ve always found a way to get capital when we needed it.
In terms of challenges, we’ve faced a hostile takeover bid from a Canadian public company, a company called DataMirror that tried to acquire IDION, the public parent company of Vision Solutions, and we successfully defended that. About a year ago, we completed a buyout of Vision Solutions from IDION. Management partnered with Thoma Cressey Bravo as a private equity firm and we exited the Vision business from IDION. Since then, we’ve continued growing and we’ve concluded two additional corporate transactions where we’ve expanded the business by quite a margin.
Angel Mehta: Do acquisitions get easier each time or are they always as challenging as they look from the outside?
Angel Mehta: Do acquisitions get easier each time or are they always as challenging as they look from the outside?
Nicolaas Vlok: I think you probably get used to the turbulence a little more, you gain more experience in dealing with integration challenges, but they’re never easy – especially when you’re dealing primarily withacquiring people, as we are in the software business. You either succeed or you fail based on your ability to get people on-board quickly after you’ve acquired the business. So, you definitely get better at that, but it’s never easy.
Angel Mehta: What are the areas that consume the most mental bandwidth?
Nicolaas Vlok: The big question for us is, how do we take a 100-million-dollar business and make it a half-a-billion-dollar business? It is a whole different ball game to jump from being a $10M company to being a $50M company. I believe the jump from $100M to $500M will be as significant and in ways more challenging. I spend quite a bit of time thinking about how to build a great business that can sustainably grow. The ongoing integration of global business cultures is, of course, a regular issue: Keeping people motivated, keeping them focused on the end goal, making sure they don’t lose passion is very important.
Angel Mehta: As you’re growing to $100 million, you’ve had to bring in new people with new skills and add them to the management team. I’ve always found that people from big companies have a tough time working in smaller, high-growth start-ups. Have you had that experience as well?
Nicolaas Vlok: Yes, but you need to actually deal with it head-on and start with it in the interview cycle. Typically, I wouldn’t hire executives out of very large companies unless I knew them and worked with them and see that they’ve got an entrepreneurial side to them. In fact, one of our VPs came from IBM a little while ago and we interfaced for many years with him directly and learned that he’s pretty much an entrepreneurial-focused manager – even in a big IBM organization. He was the manager that spent a lot of his time nurturing early-on business relationships, spent a lot of time assisting IBM bringing Linux to market and getting that off the ground, and was someone that would fit well into our culture. He joined us about 18 months ago and it’s been a real pleasure working with someone like that. They are a rare find in large companies, but you need to find individuals that can fit into your organization’s culture.
Angel Mehta: What do you think it is that big company people just don’t get about working in a high-growth, early-stage venture? Why do they have so many problems?
Nicolaas Vlok: You know, I think in many bigger companies, they’re not necessarily encouraged to go try something out, and if it fails learn from it and go at it again. The risk of a career failure looms over your head. In a small business, in a startup business, you need to go out and experience a lot of the challenges and learn from them and move on. I think in most big companies, it’s a much more controlled environment. There’s probably a lot more padding on the walls if you run into them, thus the impact on the overall business is small, but you’re not necessarily encouraged to go and run full-steam and see what happens. In a business like ours, we basically all need to be entrepreneurs to continue to move it forward. I don’t view $100M as that significant. I still think there’s a whole new curve of growth left for this company that’s ahead of us.
Angel Mehta: What is the business problem that you solve for customers and how do you define the market that you’re going after?
Nicolaas Vlok: First of all, we are solving down time, which cost companies money. Companies that cannot afford for mission critical applications and infrastructure to be down, buy our software. Our software will provide them with a real-time environment where a production system server with an application is replicated to another system. When they experience down time, they basically fail over within minutes to the backup production system and business would continue without interruption. About 6,000 customers today use us as their trusted partner. Some of the largest corporations, 94 of the global Fortune 100, use our software. Think of the largest banks in the world, airlines, every casino on the strip in Las Vegas, hospitals, manufacturers, fast-moving retail goods, they all have mission-critical applications that cannot be down. Down time costs money or costs lives in the case of a hospital; you cannot get access to patient data and that’s the typical problem we solve for a customer out there.
Angel Mehta: Have you found that most of your successes over the years have come from well-planned decisions and well thought out strategies or more lucky breaks?
Nicolaas Vlok: I would say the big picture strategy hasn’t shifted much in probably five, six years. Along the way, you need to work hard at it but the few lucky breaks that kind of move the strategy at a little faster pace always helps the business and accelerates it. But you can't just be running in ten different directions and not have a big picture strategy and then hope for your next lucky break. At least not in the market we know, which a fairly mature, mid-range server market. You need to know where your north star is, and continue moving in that direction, trying to accelerate the pace.
But as in any business, you’ll have some lucky breaks and you’ll have some challenges you need to deal with. The downhill opportunities you get help you pick up speed for the next uphill challenge. But I don’t define success by lucky breaks.
Angel Mehta: Did you plan to launch a business and then go out and find the idea or did you have the idea and then decided to launch a business?
Nicolaas Vlok: We started, actually, with a plan in 1994, reselling computer hardware and the whole goal was to get enough capital or profitability and cash flow going doing and then transition the business, becoming much more of a software and services company. That’s how we started out – knowing that we wanted to build a software business, hopefully being more global than South Africa and the high-availability market place intrigued us. But the way we kind of got involved in it was us being a distributor of a high-availability product and then developing some software that would complement the high-availability products we sold by enabling clustering functionality in a high-availability environment. Today, we are the largest high-availability vendor on the IBM server platform.
Angel Mehta: What is your least favourite part of your job?
Nicolaas Vlok: It sometimes gets challenging and lonely and then you need to make decisions that you know will ultimately be good for the business and not only for a situation. It might be a decision that impacts people or people’s lives or people’s careers. I guess the other part that I’m not always enjoying is some of the back office work that needs to go into managing a business. It’s not always exciting, but it’s necessary as you grow your business.
Angel Mehta: Can you give me a sense of how your personal leadership style has changed over the years? What are some of the things that you’ve recognized in yourself as weaknesses or things that you do differently now than you did before?
Nicolaas Vlok: I used to be very hands-on; I couldn’t stay out of anything for a long time, but our business has grown to a point where you need to rely on your management managing the business. We have offices around the world, with over 400 employees and they’re not all in California. California’s office has about 120 people, the rest are spread through four other US offices, three European offices and two offices in Latin America and Asia, so there’s no way you can get to know every little detail. There’s no opportunity for you to make every decision and you need to empower people to make those decisions. You need to let them become the manager that you thought you were hiring and generally people will rise up to the challenge. If you do not allow people the room to manage, they’ll probably not stick around for long. The one thing I can say is the management team that I started with quite some time ago has all been with this company for six, seven years or longer. The two senior guys, my CFO and my CTO, and many other folks in this company have been around for a long time, so I think we allow people a lot of freedom to manage. But I still guide along the way to make sure that we’re all marching in unison towards our goal that we have. The best I can do is to make sure that I point people in the right direction.
Nicolaas Vlok is President and CEO of Vision Solutions, Inc, the world’s leading provider of high availability, disaster recovery and data management solutions for the IBM® System i and System p markets. His entrepreneurial career began at age 14 when he started selling computer hardware. At the age of 21, while studying Engineering at the University of Pretoria in South Africa, Nicolaas started TST, a computer hardware and network integration company. TST thrived off his unique mix of business acumen and technical skills. Nicolaas’ passion and knowledge for IT were the building blocks of his visionary thinking. In the next three years, before going public, the company had zero gearing, was cash flow positive and returned a profit every year. He re-branded the business IDION and in August 1998, listed IDION Technology Holdings on the Johannesburg Stock Exchange. Financial Mail rated IDION as the best IT listing of 1998. At age 25, Nicolaas was the youngest CEO of a listed company in South Africa. As IDION continued to grow, his focus shifted to software solutions and services. He set his sight on turning the company into an international software developer that could meet the growing needs for high availability through world-class software and services. IDION acquired US-based Vision Solutions in 2000. This marked an important leap into the international arena for IDION and laid the foundation for further worldwide growth. Since the acquisition, Nicolaas has led Vision Solutions to become a force in the industry providing information availability management solutions to customers around the world. For interview feedback, contact Nicolaas at email@example.com
Angel Mehta is Managing Director of Sterling-Hoffman, a retained executive search firm focused on VP Sales, VP Marketing and CEO searches for enterprise software companies and lead investor in www.softwaresalesjobs.com, the #1 site for software sales jobs. Angel can be reached for feedback at firstname.lastname@example.org