Pythian, founded in September 1997, offers one of the world’s largest concentrations of database administration (DBA) expertise, specializing in Oracle, Oracle Applications, MySQL, Microsoft SQL Server and systems administration for Unix/Linux and Windows platforms.
Founder Paul Vallée launched Pythian—his fourth company—at the age of 25. From two employees and a couple of laptops, the company has grown to a team of more than 100 with offices in North America, Europe and Asia. It generates well in excess of $1 million in revenue each month, and has turned a profit every year since its inception. In fact, Pythian is on the Profit 200, the list of the Fastest Growing Companies in Canada!
A key contributor to Pythian’s success is CEO Andrew Waitman. Bringing 12 years of experience in the venture capital sector to the company, Andrew helped Paul transform Pythian’s business functions, allowing it to continue a pace of rapid growth even during the economic downturn.
Paul, what inspired you to start your business?
PV: In the fall of 1996, I moved to Minneapolis and worked as a consultant. Consulting in America is very different than in Canada. In the U.S., it’s very solutions-oriented—high touch, high overhead. In Canada, it’s more about ‘body-shopping’—leaner, with lower rates. As there wasn’t a lot of body-shopping done in the U.S., I thought that presented an interesting opportunity.
With that awareness kicking around in my head, I came back to Ottawa and worked for Telesat Mobile. I was managing the company’s servers, but they were in a secure satellite control room that I wasn’t certified to enter—so I had to learn remote database management. In 1997, I said to myself, “Hey, I can start my own company doing this.”
What was the market need?
PV: There are about 100,000 DBAs in the U.S., with the vast majority working in-house, full-time for employers. They make about $100,000 per year. You do the math: 100,000 times 100,000—it’s a big market. And I knew a consulting company could do the same job much better and much cheaper than companies were paying for in-house support. When something is available cheaper and better, industries tend to flip. My prediction is that sometime in the next five to 10 years, those 100,000 in-house DBAs will all flip from being in-house to being located in the cloud.
It’s a game of deferred gratification. I’ve gone from making a good living to a mediocre one back to making a good living.
Where did your business’s seed capital come from?
PV: We had no capital in the beginning. Pythian’s co-founder and I quit our jobs and worked on the company full-time, relying on our partners’ modestly paying jobs to support us. We lived like students. We borrowed a bit of money to buy some laptops and a server for the website. I call it the ‘abject poverty funding model.’
What makes your services better?
PV: Our team, our people. The higher the value of a database environment, the more you need to have an elite team taking care of it. So the question becomes how to attract that kind of elite team. Well, the world’s leading minds in the field want complex, challenging work. So we strive to give that to our engineers. We want to become the industry’s employer of choice—and in doing so, become the vendor of choice for the world’s highest-value infrastructures. Right now, Pythian has six Oracle ACE/ACE Directors (individuals recognized by Oracle for their strong and independent credentials in the Oracle community) on staff—more than any other company in the world. We’re trying to concentrate that type of expertise so that customers look around and feel like it would be irresponsible to engage any other vendor.
How long did it take to build traction behind your business?
PV: Our early years were all about direct sales. We were calling companies looking to hire in-house DBAs and asked them to consider us as an alternative, telling them we’d do it for the same price and take on all the same responsibilities. In 2005, we adopted a ‘community service model You can only go so far making claims in your marketing—eventually you have to prove them. So we started blogging, writing white papers, doing presentations. If you’re writing a blog and posting daily, you can’t fake it—you need to be doing the work you’re talking about. Now we have the most popular blog in the DBA blogosphere, with 70,000 unique visitors per month—and we’ve started to parlay this social capital into a stronger relationship with Oracle.
You can’t be afraid to fail. My first three companies failed miserably, but I learned a lot.
How did you build your management team?
PV: I got lucky. At first, I wasn’t able to organize the company the way I wanted because I wasn’t solely in control. When I bought out my partner in 2007, I proceeded to hire our first external manager. In the fall of 2008, I met Andrew Waitman—he had helped negotiate and establish the value of the company during the buyout. When I started the company, we were just winging it. We didn’t have traditional sales and marketing, and we certainly had none of the skills Andrew had. We were successful despite ourselves. When I brought Andrew into the company, that’s when we really took off.
Andrew, can you elaborate on how were you brought into the business?
AW: During the break-up of the original partnership, Paul asked me to assess the value of the firm. When he was raising funds to buy out his partner’s equity in 2007, he asked if I’d be interested in making an investment. As a result of 12 years in the venture capital business funding product companies, my personal ‘angel’ investment interest tended to focus more on service companies—and as I was very interested in what I’d seen at Pythian, I said yes. I decided to get out of the venture business just before the economic tsunami hit, and at that time I started meeting with some of the companies I had made personal investments in. I told Paul, “I’m a free agent now, why don’t I come in and help out?”
My first view was that it would be really informal, but he wisely decided he wanted more of a commitment—so I became Executive Chairman. I brought in my laptop, found a desk to sit at and just started to help out. But eventually I moved from asking questions to making suggestions. Later, Paul recommended we switch titles. As the venture business still had a feeling of fear and doom in the air, I thought getting some operational experience would be valuable—so I took over as CEO in January 2009.
…don’t drink the negativity Kool-Aid. It’s really not as hard as everyone tells you—purely by believing in yourself you will succeed.
And what was it that attracted you to stay?
AW: If you’re going to get some ‘street cred’ as a first-time CEO, it’s better to go into a situation that needs a fair amount of CEO-type skills—one where you can build a leadership team, set reporting standards, basic business blocking and tackling. If you go into a company that’s running smoothly, you have to be really smart about where to take it next. At Pythian, my role was to get the basic business functions such as HR, Finance, Sales and Marketing staffed and running effectively. I really liked the responsibility of getting the right people in the right roles. Now that the company is operating well, it’s about figuring out how to rapidly grow the business and making decisions regarding strategic alliances, partnerships and business development.
Paul, how do you keep your staff motivated and engaged?
PV: We’re able to give employees a work/life balance that is unusual in the industry. Sometimes production support work has to happen overnight or on weekends. Like an obstetrician or firefighter, you can’t predict when it will require your attention. But because of our model, we know how exactly many people we need to deliver on our contracts. As a result, we can offer our engineers a 40 to 45 hour week, every week. In our space, a lot of people work 50 to 60 hours or more.
We also use the SEED model—self-directed education and development. Every employee has a work-related expense account to optimize their ability to do their work, whether it’s to buy books, training, equipment. And people use it responsibility. It’s remarkable; if you just trust people, they rise to the level of that trust.
If you’re writing a blog and posting daily, you can’t fake it—you need to be doing the work you’re talking about.
How did you brand your business and market it?
PV: The company brand goes back to Greek mythology. The Oracle in Ancient Greece was named Pythia. She hosted the Pythian Games—contests of not just athleticism but also poetry and music performance. That’s already a nice brand—a dictionary word about a world-class competition of excellence. And that ties in nicely with what we do here. Like an athlete or musician, when performance time comes, there’s no more practice or rehearsal—you need to put into motion a lifetime of skills acquisition and execute flawlessly.
As for marketing, before 2005, we had only direct sales with minimal web presence. In 2005, we launched the blog and really stepped up our industry presence. With Andrew on board, we now have a more modern marketing strategy, are doing more co-marketing with Oracle, participating in conferences and webinars, that sort of thing.
Could you give a brief description of your biggest success so far?
PV: Recently, we negotiated the largest production support contract in our company’s history. It’s substantial in that it includes operational support for an Exadata environment—basically the customer’s entire business. It’s very big from a sales point of view.
Also, in 2011, we have made the Profit 200 once again. It is a great achievement to be recognized as one of Canada’s fastest growing companies.
Now that the company is operating well, it’s about figuring out how to rapidly grow the business and making decisions regarding strategic alliances, partnerships and business development.
Do you have plans to expand to new markets/products?
PV: We’re in the process of renting space in the UK to re-establish a presence in Europe. We now have our first account executives on the ground in Toronto, New York City, and California and we’re hiring for the UK. We want to have an international, in-territory presence—not just telesales. In the last two or three years we have also invested an enormous amount in R&D. What we’re working on will be a game-changer for us when it comes to delivering our services and gaining a strategic, competitive advantage.
What are your goals as an entrepreneur?
PV: I have this outstanding vehicle in Pythian—the management team and the resources—to enable my ideas. I’m still looking to build out this company and flip the industry inside-out. There is still a lot of work to be done.
What is your exit strategy?
PV: Right now I’m having a lot of fun. I think the opportunity is larger than the rest of industry has realized. I have to work on it more to achieve what I want. If you offered me a billion for Pythian I would sell… but not yet.
Andrew, what are the company’s goals for growth?
AW: Our goal throughout the entire economic downturn was to grow consistently year over year. Today, our growth goal is 30 percent per year. I’m trying to push towards 50 percent, but that could be straining in terms of maintaining standards and quality, so we have to be cautious. We recently moved our European office from Prague to Cambridge. We’re also expanding in Australia. In North America, Ontario and the GTA (Greater Toronto Area) are the key areas to expand. Same with Silicon Valley and New York. Most services are bought locally and are introduced by referrals within a person’s local network—the faster we can build up a local presence in these regions, the better.
We borrowed a bit of money to buy some laptops and a server for the website. I call it the ‘abject poverty funding model.’
What is the company’s expansion funding strategy?
AW: Paul has always grown by reinvesting the profits of the company. We are considering other funding strategies that will help us grow faster, including taking on additional debt. As the majority of our customers are continuously buying our services, we can be more focused on gaining new customers and reducing churn. The unique nature of our business puts us in a position where we are able to raise debt capital.
The challenge in the venture business is that although money can accelerate investment, it only produces success if you know what to invest in. When you get a large capital infusion without tight fiscal discipline, you can waste a lot of money chasing too many poor ideas. So a modest amount of debt can provide both fiscal discipline and currency for funding growth. But at this time we are continuing to fund growth through internally generated cash flow. We’ve been paying down debt and reinvesting back in the company—the same principles that have supported us well to this point.
Paul, how do you define success?
PV: Success means having a satisfying worklife. It means enjoying your job and having opportunities for self-actualization and self-direction. Working towards that success often means being in the middle of a failure. You can’t be afraid to fail. My first three companies failed miserably, but I learned a lot.
To what do you most attribute your success?
PV: A really good work ethic. You have to be ready to work long and hard, especially early on.
What advice would you give to others who want to become entrepreneurs?
PV: As a blanket statement, be an entrepreneur when you’re young. Do it before you have a mortgage and children, when you’re already living like a student. I’d also say choose your founders carefully. Changing your idea is easier than changing your founders. And when you do have co-founders, nail down the partnership agreement early on—before you have value. Last, I guess I would say don’t drink the negativity Kool-Aid. It’s really not as hard as everyone tells you—purely by believing in yourself you will succeed. Just figure out your inputs in terms of time and costs and convert that into a living that compensates you well. The ability to start a company from scratch is a lot easier now than it was in the past.
Like an athlete or musician, when performance time comes, there’s no more practice or rehearsal—you need to put into motion a lifetime of skills acquisition and execute flawlessly.
If you were to recommend books or movies to a young entrepreneur, what would they be?
- How to Win Friends and Influence People by Dale Carnegie
- Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher and William Ury
- The One-Minute Manager by Kenneth Blanchard and Spencer Johnson
How has being an entrepreneur affected your life?
PV: It’s a game of deferred gratification. I’ve gone from making a good living to a mediocre one back to making a good living. On paper, the company is worth something—but it never seems to be the time to cash in. If you can’t play the waiting game and leave your bet on the table, it won’t work for you.
What is the best part of owning a business?
PV: The sheer excellence of the people I get to surround myself with. I love being the dumbest guy in the room. When you find people who can do things better than you ever could and they bring forward incredible ideas and insights, I find that to be enormously pleasurable.
If you had the chance to start over again, what would you do differently?
PV: I would sign a partnership agreement before the company had any value. If I’d had that advice early on, it would have made a difference in terms of my angst and legal bills. But I’ve also learned that you can’t have any regrets. You can’t achieve anything if you don’t gamble a bit. If you’re successful at everything, you’re not trying hard enough or taking on an ambitious enough agenda.
It’s remarkable; if you just trust people, they rise to the level of that trust.
A shining example of the entrepreneurial spirit
Paul’s entrepreneurial spirit is a great example for others to follow. By identifying a clear market opportunity and devoting his full commitment to the company, he succeeded—even with little to no capital. At the same time, Paul understood his own limitations and wasn’t afraid to ask for help and defer responsibilities when needed. As a result, Pythian is now a global leader in its field—and continues to grow at an incredible rate.
Visit the Pythian website for more information.