National Business Awards SME finalist Focus: Dr Andy Harter, founder & CEO, RealVNC

Tell us about your business
RealVNC develops software which allows one desktop or mobile to take over the screen of any other. VNC technology is on over a billion different devices, and is on more different kinds of computer than any other software application. It is even an official part of the internet, alongside the protocols for email and web.

The company has won three Queen’s Awards for Enterprise in three years, and is the fastest growing software company in Cambridge according to Deloitte’s Technology Fast 50 ranking. It recently received the Royal Academy of Engineering’s MacRobert Award, the most prestigious UK prize for engineering innovation.

How did you fund your business?
The business was founded in 2002, and has been profitable from the outset without any kind of external investment. Initial finances were effectively a form of crowdfunding long before it was known as that. Users of a free version of our software bought “I Love VNC” branded merchandise such as t-shirts and baseball caps, and made donations.

It was enough to bootstrap the development of commercial products. The company became an early proponent of the “freemium” model, allowing a basic version to be used freely but offering a simple upgrade to a premium commercial version. A second royalty based revenue stream is from third-party products which embed our technology under license, of which there are some fifty or so. This business strategy has generated revenues that have seen 50% compound annual growth rate for 10 years.

What is the biggest challenge SMEs are currently facing?
I suspect most SMEs find funding to be the biggest challenge. Until a company reaches profitability, it is reliant on investment or loans and cash flow becomes critical. However, there are now a greater range of investment opportunities than ever, including government initiatives, crowdfunding, angels, super-angels, VC’s, and new funds aimed at SMEs wanting to make it big.

Our biggest challenge has been to preserve recruitment standards whilst growing. It’s easy just to employ someone because you want to expand quickly, but the wrong person can set you back. In Cambridge, where we are based, the jobs market is very competitive. It’s not just about salary, you need to have interesting work and a vibrant company culture to attract and retain the best. Having good coffee helps too!

Can you give any advice to others starting up businesses?
Have confidence in your own judgement and abilities. If you listened to all the advice and perceived wisdom, then you might never start. Beware particularly aware of those with theoretical or abstract knowledge, someone who has actually done it is likely to be worth listening to over a business consultant with an MBA.

Don’t underestimate the need for marketing and sales, it’s a big world out there and simply creating a website and doing a bit of search engine optimisation is unlikely to be enough. Developing a brand is hard work and needs resources.

How do you foster innovation throughout your business?
It has to come from the bottom up. Even if the founders had the great idea initially, that doesn’t scale up. Surround yourself with bright people and give them interesting challenges and problems to solve. You can mentor and guide, but you can’t micromanage innovation. Hand out as much responsibility and ownership as you can to the lowest level that can use it, and work hard to build that culture throughout the business. Have fewer, shorter meetings!