Huddle, With a Fresh $24M, Puts a Predictive Spin on File Sharing
Was Steve Jobs correct that file sharing and synchronization is “a feature, not a product”? That’s what the Apple co-founder told Drew Houston in a now-famous 2009 meeting where he proposed buying Houston’s startup, Dropbox, for nine figures. Houston turned down the offer, Apple went on to introduce iCloud, and Dropbox went on to raise $250 million in one of the largest venture rounds of 2011.
Jobs may yet turn out to be right: Apple, Google, and Microsoft are all busy pushing operating-system extensions that help consumers share and synchronize files across their devices without having to turn to third parties. Meanwhile, though, investors continue to pour money into younger companies offering cloud-based sharing , synchronization, and collaboration technologies, whether they’re aimed at consumers, small and medium-sized businesses, or large enterprises. Jive Software raised $161 million in its December IPO; Box has raised $129 million in a pair of venture rounds over the last 16 months; Yammer has added $103 million to its stash; SugarSync recently collected $15 million; Egnyte raised $10 million; ShareFile got scooped up by Citrix Systems for an undisclosed sum; and EMC just bought Syncplicity.
Then there’s Huddle, an enterprise-targeted sharing and collaboration startup founded in 2006. The London- and San Francisco-based company has had a lower profile in Silicon Valley than competitors like Jive, Dropbox, and Box. But its tools are used by 80 percent of the Fortune 500, as well as quite a few government organizations, including the European Council and Britain’s top-secret spy agencies.
The company raised a $24 million Series C round last week and is nearly profitable, according to co-founder and CEO Alastair Mitchell. General partner Tom Mawhinney at Jafco Ventures, which led the round, said Huddle’s service has “significant momentum in the marketplace” thanks to its signature feature, an “intelligent” file synchronization system that predicts which files workers will need and copies those documents to their devices automatically.
It can be hard to tell today’s document sharing technologies apart—at bottom, after all, they’re just fancy systems for sending files around to your colleagues. (There’s a name for the poor man’s enterprise content management system: e-mail.) But for the moment, Huddle’s predictive sync feature, which was introduced in February, appears to be unique, and could help set the company apart from the other startups in its brood, not to mention the giant they’re all competing against: Microsoft and its SharePoint document sharing system.
Andy McLoughlin, Huddle’s San Francisco-based co-founder and executive vice president of strategy, says some kind of intelligent filtering is needed to make up for the huge volume of data stored on enterprise sharing systems. “If I’m working for P&G or NASA or Unilever, there might be hundreds of terabytes on Huddle,” McLoughlin says. “There is no way I want to sync all of that down to my machine, and I’m not going to know what the most important and relevant information is for me. What we have built is intelligence that recommends content based on everything it knows about me, the actions I’ve performed in the past, and the people I’m connected to, while still respecting permissions and security.”
It’s a little like taking Web-based content and commerce recommendation technology and applying it to file management. McLoughlin says intelligent sync “is going to be a huge differentiator going forward,” and not just with respect to Box, Dropbox, Jive, Egnyte, and the like. “We really don’t see those guys as competitors as much as Microsoft SharePoint, and there you are looking at huge organizations that have years and years of files stored away. The big issue is how can we turn all that archived content into a living, breathing thing that people can discover.”
The inspiration for Huddle came from Mitchell’s experiences using SharePoint in his last job at Dunnhumby, a London-based media agency. “I ran a 300-person team, and we worked with consumer packaged good companies like Kraft and P&G,” Mitchell told me. “But we couldn’t invite these companies into our SharePoint server. We spent $3 million deploying a system that no one used internally and that didn’t work externally. It was a complete disaster. Yet that is the reality of what working in an enterprise is like, and that is why the biggest collaboration tool everyone uses is e-mail.”
Mitchell says Huddle is “what SharePoint would have been if Microsoft had been starting today,” meaning, for one thing, that it’s cloud-based, so it doesn’t require an internal data center or an IT team to set it up or keep it running. This also means that the service costs about one-tenth as much as SharePoint, which allows Huddle to spread much more quickly; teams as small as 25 people can set up Huddle and start sharing documents almost instantly, Mitchell says. “There are three reasons people buy Huddle, and one is that they want to set up a collaborative solution fast,” he told me. “They’ve gone to their IT guy, who says ‘I can give you SharePoint in a month,’ and with Huddle you get 90 percent of what you get with SharePoint in five minutes.”
The other two reasons: mobile access (Huddle has apps for iOS, Android, and BlackBerry devices) and file sharing across corporate firewalls. Companies collaborating with outside firms—like Dunnhumby—often have difficulty opening up their intranets or SharePoint installation to external users. Within Huddle, companies can set up “huddles” or secure workspaces and invite everyone involved in a project, whether they’re inside our outside the firewall.
All of that, though, was before the introduction of Huddle Sync. Now the company emphasizes “intelligence”—meaning automatic synchronization—as its main advantage over SharePoint and other file sharing options.
In a broadband, always-on world, it’s easy to grab a document off a remote server—the issue is that you might not even know it exists. “Once you get to a certain scale, great content is being produced inside your business that you may not even know about,” says McLoughlin. “You might be a sales guy and you may not know about the newest white paper because you haven’t been explicitly notified. Huddle Sync will bring it down to your device and expose it and say ‘Here are the things we know you are going to want to know about.’”
While Huddle could have kept running its business off existing revenues indefinitely, “growing the business requires money, and frankly we are in a market where the other companies have a lot of cash,” McLoughlin says; hence the recent Series C round. Huddle will use some of the cash to double in size from its current 100 employees to 200 by the end of the year, he says. A lot of the hiring will take place in the San Francisco co-headquarters, which was set up last year after the firm recognized that some 40 percent of its business was coming from U.S. companies.
So, is file sharing and synchronization ultimately a product or a feature? “I think that Steve was probably being a bit dismissive when he said that,” McLoughlin says. “If it’s a feature, it’s a very, very key feature.” Huddle doesn’t see iCloud, Google Drive, or Microsoft’s SkyDrive as big threats, he says, since features built into consumer operating systems generally don’t meet the security needs of enterprises. And the trends—with venture money still pouring into file-sharing startups, and big companies like VMware building their own systems—show that the market is asking for better technology.
“CIOs are not convinced that existing tools are doing the job well enough,” McLoughlin says. “Frankly, we wouldn’t be doing this unless we saw this as a massive opportunity.”