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Hi everyone. Marco Montemagno here. Digital Domination Summit 2013. With me, Brad Garlinghouse,
CEO of YouSendIt. Hi Brad. How are you doing? Marco it's going great. Thanks for having
me. So Brad the first point that I want to start from is the reason why I choose YouSendIt
to be here. And it is a very interesting story because I was talking with my staff and they
proposed—to be honest—other companies in the Cloud business. They talked about Dropbox
and Box so on. And then I went deeper into the numbers, and I saw that YouSendIt—from
the numbers that I saw— but correct me if I'm wrong— is 3 times bigger than Box—for
instance— and I thought , "Gosh, you know, as amazing as the news and hype that often
comes up from Silicon Valley, it doesn't really respect the facts." So I said, "No, let's
go with YouSendIt. They get big numbers. They are an historical company, and they are doing
a lot of things— not only sending large files anymore." And so here we are. Well absolutely.
I appreciate you doing that. You know one of the things that's interesting about living
in Silicon Valley, and I've been living here for 15 years. It's been a phenomenal opportunity,
but one of the things you learn is that there is definitely a hype cycle in Silicon Valley.
>>Right. You know I sometimes refer to it as the Silicon Valley Echo Chamber. And what
we have seen on occasion is the hype around a company gets ahead of its reality. And ultimately
hype and reality have to come into equilibrium at some point. And what we saw happen with
companies like Zynga and Groupon is the hype was way ahead of the reality, and then they
went public, and the transparency of the public markets kind of forced the hype and reality
to come into balance, and that was a painful process. You know I feel incredibly fortunate
we have a business. We have now 42 million registered users. Wow. >>It's continued to
grow nicely. We had a record April and record first quarter. We signed customers ranging
from Nike to Ping to Ryder—the PGA. So we continue to have a ton of momentum, and as
long as we can continue to execute well, we will have a great future regardless of how
the Echo Chamber reacts. How is—you were before in AOL and Yahoo and now in YouSendIt
for several months. What's the main difference? YouSendIt—from the external perception I
think YouSendIt is a solid business and still the name is a little bit enigmatic because
people only think about sending large files, but we'll talk about that—how it's changing
the business— but how was coming into YouSendIt considering your previous experiences? Well
I always felt like I was—inside these large organizations— I always try to adopt and
manage in a very entrepreneurial way and empowering people and giving them plenty of rope. I fundamentally
believe that a company is a reflection of its people and its culture, and if we can
create a culture that embraces risk and tolerates failure we'll have great outcomes. So it's
been a really great, rewarding experience. I think many people who work at large companies
have experienced the amount of time you spend on things that aren't about the customer.
They aren't about moving the ball forward for the business or for the customer. So for
me it's been great to be at a small company where we can really focus on delivering amazing
customer outcomes. Right. I was talking with Seth Godin recently—one of the speakers
of Digital Domination Summit— and he kept on telling, "Try to find your customer. Start
from your customer, and then build the product around him. Find your ideal customer." But
in your case you have to handle the private user and the Fortune 500 Companies— so totally
different needs. How can you find your ideal customer in this scenario? First I think Seth
is one of the smartest guys in the business when it comes to thinking about that. So I'm
sure that's a great interview, and I'll look forward to watching it. But for me it's very
much—we start with a use case— how are people needing to share and collaborate given
the transition to mobile? For us it's been—mobile has been a huge new tailwind for the business.
We started with send—let's help people solve the management and movement of large files.
And then we found ourselves in a position where people wanted to access those files
on a mobile device. They wanted secure access to that. They wanted control of those documents.
And so we really thought about—whether it's a Fortune 500 Company or it's the architect's
firm down the street they really have a lot of similar use cases to how they are interacting
and managing files. >>Right. Given how the overall landscape has changed, and that's
the landscape—I mean the introduction of tablets, the introduction of Android and iPhone
IOS. I think it's been a pretty profound change in how people want to store, access, and manage
their data. Yeah. I said before, Brad, that people still think about YouSendIt as the
company to send large files. Probably because of the name, so my proposal is change the
name. give it a different name to make the people understand that it's not only sending
large files, but it's older Cloud business and storage. So YouSendIt now is taking care
of so many stuff. So if you want to call it Montemagno or something like that I'll be
happy of giving you my name without copyright asking. (laughing) A small license fee to
Marco Montemagno of Digital Domination. I'm sure we could work out a deal. I completely
agree with your core point here. YouSendIt has been a fabulous name for the history of
the company, but if you look at where we are today and where we're going it really is a
name that has outgrown itself. We do so much more than just send today— I mean look at
our goals for intergalactic domination it's a name that constrains us in some ways. And
so we are going to change the name of the company in the not-too-distant future—maybe
90 days we plan to roll out a major upgrade to the products, the user experience, but
also a new brand that better reflects who we are and where we're going. Brad, are all
the companies going into the Cloud and that's it period? Or is—I want to say no but Cloud
is still problematic with privacy and security and those kind of things so there are areas
and sectors that are better not to put their data in the Cloud? What's your vision about
that? Well I think as is the case with a lot of industries, different segments of the industry
are more aggressive in their early adopter status versus the crossing the chasm into
the mainstream. I think we're certainly seeing that in the adoption of Cloud-based tools,
Cloud-based services. We're fortunate to see—our core market really has been the creative professional.
Whether that's a photographer, an architect, somebody working with CAD/CAM files. That
has been our core market, and they have been early adopters of a lot of these tools because
it helps them get their jobs done. But as I mentioned some very large Fortune 500 Companies—
we count come of the largest Fortune 50 Companies in the United States as customers, >>Okay.
and we see more and more companies recognizing that there is a fundamental shift happening
and that's everywhere from the boardroom to the entry-level worker. The fundamental nature
of how mobile is driving some of these changes affects everyone, and so—I think there will
be laggards because of concerns about security, but I think if you look forward 10 years—let's
say— as this adventure plays out—I think you're going to see it affect really all companies
pretty dramatically. I heard you talking about Cloud-Nostic does this word that it becoming
a buzzword— could you elaborate on that because I think it is a very interesting concept.
One of the things that we have evangelized, and as we see the vision for the future the
consumerization of IT—it is clearly continuing to gain widespread adoption within the enterprise,
and what that means is you're not— we don't believe the future is a single stack of technology
solutions. And so you have multiple Cloud tools, and we kind of coined this term—
we feel like there is a—the need for a Cloud-Nostic approach to delivering some of these solutions—
allowing professionals to locate data and content wherever it lives, regardless of the
Cloud or the mobile platform that they're working with. And so we acquired a small company
earlier this year called Found, >>Okay. >>and Found is very much indicative of this trend.
It allows you to authenticate with various Cloud services— whether it's your own hard
drive—your Private Cloud or DropBox, or Evernote, or Gmail even has a Cloud tool—
and it allows you to look and find documents from— you know if I was looking for a document
from Marco I could look across all the services with one search— and we think the search
capability is really just that first step of, "How do we deliver additional solutions
that are Cloud-Nostic?" Because the world is not going to standardize on just one Cloud
solution so we really want to be at that intersection of how to take advantage of the metadata in
a way that really works well. YouSendIt is growing—keeps growing a lot. I think I read
somewhere—I don't remember where— that it is growing around 30,000—50,000 users
per day or something like that. Is that correct, or is my— No, that's correct we have had
great tailwinds. Last year—from top of mind—we grew from about 30 million registered users
to about 40 million registered users >>Okay. So it's continued to be some really nice adoption.
Most importantly we love to see that our paid customers has continued to grow very nicely,
and —if you solve real customer problems your customers will treat you well. and >>Right.
>>that has certainly been the case for us. But what's your suggestion—what are your
tips for customer acquisition strategies? Because a lot of companies again struggle
with growing and often spirit is not so easy—crises everywhere. So what would you recommend that
could be a good strategy from your experience—your point of view to grow in the digital world?
I think it's a great question, and I won't pretend that it's got a one-size-fits-all
and that everyone has the same approach, but what has served YouSendIt incredibly well
is the Freemium Viral Adoption Model. This has proved very, very successful for us in
offering some base amount of functionality and tools for free. And then if you get them
engaged and have a great experience with that then they find, "Hey I want more tools; I
want more capability." And so we have been successful in upselling. I'll give you one
interesting example. I think the Freemium model depends upon solving— what I'll call
the—well I don't want to call it the long tale— but really the bottom-up versus top-down
approach to technology. Instead of going out and hiring hundreds and hundreds of sales
people we've really counted on delivering a great experience from the bottom up and
we have broad adoption at the lower parts of organization, and then we go in and talk
to the CIO organization. So NBC hosted the summer Olympics last summer we actually had
3,000 active users inside NBC during the Olympics. >>Wow. During the 30-day period around the
Olympics they exchanged 3.3 terabytes of data >>Amazing. >>through YouSendIt, and that's
not a corporate customer. These are individual users who found a tool that helped them get
their job done. And we think it's very indicative of—if you get widespread adoption start
that conversation, and you can go back to the organization and offer administrative
controls and tools that they need to get their job done. We use the expression of, "We want
to be loved by end users but approved by IT." All right. "Loved by end users but approved
by IT." If it's free from copywright, I will use it again—this sentence—I like it.
Perfect, and I'm going to use your name for the new name of our company. Yeah, creative
confidence—I hope it is. Great. No, but it is—it really gives the sense. Another
important topic—I just want to be back on security— is it true that when a big company
wants to adopt YouSendIt, they send you someone to do a sort of due diligence to verify if
you are reliable or not? Yeah. One of the things that happens when you're siging these
Fourtune 500 contracts—or Fortune 50 contracts—they have a security organization that wants to
make sure that our practices— because we are going to be hosting their data— our
practices meet their standards. And so they will spend a couple days on site doing tests—
verification of everything from encryption of data in transport, at rest, and a whole
bunch of ways in terms of how we manage our security protocols. And so what we say is
our single-seat user at a graphic design firm or at a CAD/CAM shop—our single seat user
gets the same security that that Fortune 500 Company gets. And it really is one of the
democratizations of enterprise software that you don't have to pay really expensive enterprise
software prices >>Right. >>to get the benefit of that security. What makes the difference
then in a scenario where storage is becoming a commodity? So this is not the real value—it's
not the real value proposition because you can get it everywhere. So what makes the difference?
Where do you suggest the company to go in a scenario where everyone could get storage
everywhere? It's a really important point that you're making, and it's something that
we feel pretty passionately about. Storage is a commodity, and the price of storage will
continue to come down. So when we think about building our business we think a lot about
how do we add—how do we help you as the end user of YouSendIt be a smarter employee?
How do we help you get your job done? And part of that can be storage, and part of that
can be helping you move your files, but it's really going beyond that. And I think if you're
only solving the storage problem, that isn't a very interesting problem in the long run.
Okay. >>We take a very storage-agnostic point of view where at the end of the day if a customer
has a robust data center, and they want to store their data inside their data center,
we're actually very much, philosophically supportive of that. We think about how do
we layer on our application and our toolset on top of that independent of storage-specific
decisions. Brad, just a couple of questions more— if a company is not in the Cloud yet,
what's the right process to follow— if you have a guideline— what are the right steps
to—that you would recommend? Well the first thing I would say, there are very few companies—
they may think they're not using Cloud tools, but the reality is that their employees are
whether they know it or not. Because employees are smart, and the nature of the Web has allowed
people to access tools of all kinds and so there are various examples—I think— they're
people just say, "I want to use this tool to get my job done, and so I'm going to go
use it." Sometimes that shows up on an expense report for 10 Euro or 10 dollars to some company
to help them do their job. But I think every company has already been touched by the Cloud
whether they know it or not. That being said, you're increasingly seeing site-wide adoption
and team adoption of various Cloud-based tools. I think any time an organization is thinking
about a new toolset inside their organization, my counsel would be to make to sure to look
at what Web-based solutions exist— what SAS-based solutions exist, and include that
in the consideration set. Because where the world is going that's where I think some of
the more interesting, robust set of tools are. You can get the ease of use—I think
true of YouSendIt also— you can get the ease of use of your favorite consumer application—
your favorite consumer website— but with the security and control and robustness and
reliability that you come to expect from expensive enterprise software. You can now have that
in 1 package via SAS-based tools. I was curious about your opinion about this moment of recession,
depression, crisis—call it as you like— which is different all over the world, but
I've seen Europe obviously— some countries are really struggling at the moment. And what's
your suggestion for companies? Because YouSendIt is doing great; it's in the digital business,
but is there any secret source or secret formula that you would recommend to companies in this
specific period that is not really the best period for the market ever? I think for us
it has meant, "Let's make sure we are thinking about a global platform and not just 1 market."
Because I think that allows us to access customers and their markets, and you do see, even today—while
there are a number of economies that continue to stagnate a bit or even contract you're
also seeing other markets where you're seeing lots of growth and vibrancy. So if you're
in a market that has tremendous tailwind and the market is growing, I think it helps mute
some of the more temporal dynamics that might be driven by a macroeconomic environment that
we're seeing in Europe today. Certainly I think it is the overall tailwinds of the sea
change in how people are storing, accessing, and management of data has served us well,
and so we've been able to continue to grow quite nicely despite some of those macro trends.
Right so having a global view. Your favorite and best 3 tools, 3 apps, 3 websites that
you would recommend to make a more-efficient business. A more efficient business—well
of course the first one— you have to use YouSendIt. >>All right. (laughing) You have
to use our new IOS app. >>That's a little bit impartial. Or be—how to be more productive
or what you really use that you think, "Gosh, these 3 things." You know one of the apps
I started using recently that I absolutely love is Sonos. A music system we use in our
house, >>I love it. >>and it's just a delight— a great toolset. I tend to be—it's a U.S.-centric
answer, but I'm an avid college basketball fan, and they have some fabulous apps for
March Madness that just finished, but the ESPN—the WatchESPN app—is a phenomenal
one. The third thing for me that is a great utility is I have 3 small children and anything
that gives them instant gratification to distract them. I've got a plethora of apps on my phone
that are much more about the kids than they are me, but it still helps my productivity.
That's amazing. We were talking before the interview on how the phone now— the demographic
is completely different because people of 40, 50, 60 years old they have a lot of games
for kids, and maybe the idea is that people play with the games but are older kids. And
so kids are really controlling our apps, I agree. I blame it on my kids, but really secretly
I'm playing them. Angry Birds. (laughing) Excellent. Brad Garlinghouse, the CEO of YouSendIt.
Brad, thank you so much and good luck for the future. Thank you very much, Marco. It's
great to be here.