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August 28, 2013updated 19 Aug 2016 9:24am

Q&A: Why Citrix spent $54m on ShareFile

I caught up with ShareFile's inventor Jesse Lipson, to talk about how he started the cloud storage and collaboration firm and the sale of the company to Citrix for $54m in October 2011.

By Jason Stamper Blog

Tell me a bit more about your background – I read that you are a self-taught software developer?

That’s right, I majored in philosophy at college. I then went to work at a start-up company and one of things they asked me to do was find a vendor to do their website and then manage the updates myself. I thought, ‘I could have built this website myself’. I basically taught myself website development and it went from there.

Did you quickly realise you had an aptitude for software development?

I think I was just naturally good at programming. In my philosophy studies I had focused on logic, and I think that helped me with programming. I also think I’m naturally entrepreneurial.

What happened next?

I was building websites for companies, and some wanted a password-protected area where they could share files. Having been doing services I wanted to get into software, and among a number of products I had I thought ShareFile had the best opportunity so I went for it.

You didn’t raise VC though, did you?

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No I basically bootstrapped it. I had a few friends who were VCs and they said the idea of cloud storage had already been done by Xdrive and Streamload. They thought the idea sounded a bit ‘year-2000-ish’. So I did two years without taking a salary, living off $4,000 royalties I was making from licensing another software product to another company. We started with a quarter of a rack in a collocation centre and a Google Adwords account. We started by offering free trials and it soon grew from one employee to 80. Today there are 350.

Did you focus on enterprise customers from the beginning?

Actually at the start we sold to small businesses. But with customers in the accounting space, for instance, security needed to be built in from day one. Since the acquisition by Citrix there has been a greater focus on larger enterprises. Two weeks after the acquisition we were at Citrix Synergy demonstrating the technology to large companies. We received some great messages about what larger enterprises wanted from the product, such as the ability to also store data on-prem, and we’ve built that into the product now.

As you say, there were already rivals like Xdrive and Streamload when you started ShareFile. What made you think there was room for another rival in the space?

When I would go to parties or networking events, all the people I spoke to said they would find a use for secure cloud storage to solve one pain point or another. None of them talked about already using Xdrive or Streamload so I knew I could sell the product to some customers, I just didn’t realise quite how many at that time. As it turns out Xdrive and Streamload were probably a little too early to the market and they imploded, they’re gone now. Remember it wasn’t until about 2007 that people really started to talk seriously about cloud.

You have rivals today of course – Box has raised a lot of money, made a lot of noise and is talking about an IPO…

Box took a very different path. We were more of a timeless, bootstrapped company focused on profitability. Box has raised a lot of money as you say and it has achieved some scale as a result. When we were acquired by Citrix we asked what it was that makes Citrix valuable, and it’s partly its enterprise DNA. We brought in employees from Citrix acquisitions like Zenprise and Netscaler. That helped us build storage zones that can be on-premise as well as in the cloud, and also to build Connectors, which enable you to connect to other data sources such as Microsoft SharePoint.

For our Connectors we have an open SDK [software development kit] so people can build their own connectors to other data sources, and we’ll do our own too for document management systems. We already do SharePoint. Some of our competitors want to be a kind of uber data source, but we think the world of data is getting more fragmented, not less fragmented, and you need to be open.

Of course you can buy ShareFile standalone but with Citrix we also sell solutions. Citrix Xenmobile Enterprise brings together ShareFile with mobile device management and mobile data management for customers that want a complete mobile solution.

Another of your rivals, Egnyte, also talks about the importance of having on-premise data connectivity even though it offers cloud storage and collaboration. Do you agree with the view that customers want a hybrid model?

Yes, I do. I take a pragmatic view that while the world is moving towards cloud, many customers want to have some data on-prem either because of security concerns, regulatory issues or just because they get better performance having the data close to users. That said, we have a different approach to Egnyte, because with Egnyte even if the data is stored on-prem, there’s also a copy put up in the cloud. With ShareFile, you can have data on-prem that stays on-prem.

In which case, why would companies want ShareFile at all over a simple file server?

Functionality is pretty limited with file servers and it’s not what users expect today. Using file servers and FTP – well that’s just a raw protocol. And doing simple things like managing passwords can be so challenging that I know of at least one major firm that gives thousands of staff the same FTP user name and password just to try and cope. But that said there’s a lot of legacy data on older file servers, so with Connector we can tap into that.

You’ve talked about some of the things you have been doing as part of Citrix. Are there any other plans or integrations you can talk about?

I’m not announcing anything just yet but we recently created the SaaS division, Citrix Online, by putting together ShareFile with things like GoToMeeting, Podio [project management] and GoToMyPC. Over time you’ll see more integrations between those products for sure.







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