Byrne shows that latent talent triumphs over time
The unusual trajectory of Corvil shows how commercial success sometimes comes when the market catches up with what a start-up has to offer.
Published 31/07/2014 | 02:30
When Donal Byrne returned to Ireland in 2000 after selling his Silicon Valley company, he felt a little disconnected. He had pulled the plug on an exhilarating and financially rewarding career, building a business in the epicentre of the global tech industry. Back home, there was no shortage of projects for a successful entrepreneur to pursue but it took one start-up in particular to re-spark his enthusiasm and build on his Californian experience.
"The single biggest thing I took from Silicon Valley is that success is about attitude and an unrelenting desire to win on a world stage," he says.
"It's more about a state of mind than a state of geography. If you can develop that state of mind you can build a successful high-tech company anywhere, just as long as you have the right team."
Byrne had a hunch he had found the team in Corvil and took the job of chief executive in 2000. Today the world's biggest banks and every major stock exchange uses the firm's analytics and performance monitoring platform. With offices in five countries, close to 100 employees and a turnover of €20m, the hunch was clearly a good one.
Corvil was founded by the late professor John Lewis and three of his post-graduate research students, Ian Dowse, Fergal Toomey and Raymond Russell. Working together in the Dublin Institute of Advanced Studies, they had developed an algorithm for calculating the bandwidth required to optimise traffic flow on a network.
This was in the early days of the internet but John Flynn, managing director of ACT Venture Capital, immediately saw the potential and invested €800,000 seed funding.
"We felt businesses would be transitioning to the internet and saw the Corvil algorithm as a way of bringing telecom grade quality of service to address latency problems in public infrastructure," he says.
Because it was an unusually early stage investment, Flynn knew that part of ACT's role would be to build a commercial team around the skills of the founders. He introduced Donal Byrne to the company. Like Flynn, he was immediately impressed by the passion and calibre of John Lewis and his team.
"It had nothing to do with the technology or the market we were going after. I've been involved in a number of early stage start-ups and for me it always begins and ends with the people," he says.
With a CEO in place, the challenge was to define a go-to-market strategy and productise an innovative algorithm. Both Byrne and Flynn admit that this took longer than expected, with plenty of highs and lows to test the resolve of the company.
Ironically, the lowest point came after securing a second funding round of $19.5m (€14.5m) in 2005, which included an investment from Cisco. With a blue-chip network vendor as partner, Corvil focused on horizontal market opportunities that generated a steady trickle of customers. All good, until they hit a wall.
A bug in the algorithm was discovered that seriously undermined the effectiveness of the product. Rather than try and work around it, Donal Byrne made the case to Cisco and the board that the best way forward was to start again. The experience offers a salutary lesson for any start-up.
"If you run up against a problem, confront it and tell everyone the brutal truth," says Byrne. "Then you either pursue a strategy for going forward or you call it a day. But if you go forward, you have to jettison the baggage and start again, because it's baggage that can kill a company."
A testament to the commitment of investors and management is that everyone was prepared to step back to go forward. It was a tough time and came at a cost with 30 people losing their jobs. But Corvil came back with a more robust product and a clearer vision of what it could do. Then, as if to prove that fortune really does favour the brave, the London Stock Exchange came calling and the roadmap to success was finally revealed.
"We could solve latency problems on their stock exchange network in very short time frames. Within two weeks of meeting their CIO I was back in Dublin telling our board that we had found our market," says Byrne. "The financial sector discovered us and we never looked back."
From a relaunch in 2008, bolstered by a further $12m (€8.96m) in funding, Corvil enjoyed rapid growth with a product that helped optimise electronic trading platforms that were starting to replace traditional trading floors. Having found its market opportunity, the firm was learning more with every engagement.
Byrne describes how one particular client, Deutsche Börse, proved pivotal in defining the kind of company that Corvil would become.
"They have a fastidious attention to detail and pushed us to raise our level of quality way beyond what was expected in the industry. It was a great experience that stood us in good stead because it gave us something that competitors couldn't match," he says.
Close client relationships are embedded in Corvil's culture, a customer-led approach to product development that John Flynn always looks for when he green lights an investment. "Many Irish start-ups have great technology but struggle to find a good execution path. It's about listening hard to customers and pulling together customer advocacy groups to drive rapid development cycles," he says.
Byrne describes "empirical innovation" as the only way a tech start-up can hope to succeed, relentlessly iterating products until you solve a customer problem. "If you are not engaged deeply with a customer then you are putting your company at huge risk because you are guessing what's needed," he says. "If you haven't validated what you have in an incremental fashion, you have as much chance of winning the lottery as launching a successful business."
Perhaps the most exciting aspect of the Corvil story is how the market has moved in its direction. What were once perceived as niche services have increasingly mainstream appeal.
A growing appetite among businesses for cloud computing and big data means that the real-time operational intelligence that Corvil provides to banks and stock exchanges is now of interest to many different business verticals, opening the door to huge growth opportunities.
On the cusp of what they see as a significant watershed, neither Byrne nor Flynn are interested in talking about exit strategies. They acknowledge that a public offering or acquisition may be likely outcomes, but there's too much business to be done to give them any serious consideration.
"Like the champion golfer we focus on the next shot and then the next hole," says Byrne. "You never focus on the 18th and the final score. You just keep playing the shots."