Huddle Wows Diageo, UK Government

13 january 2013

Diageo (DEO), the London-based “drinks” leader, is a fan of Huddle — an online tool that makes global teamwork easier. Its chief technology officer exclaimed after using Huddle: “This is such a great tool that we should all be in it.”

That’s what Huddle CEO Alastair Mitchell explained to me in a February 17th interview. With people working on projects these days that involve teams of people scattered across the world — some inside your company and others working with customers and partners, the need for a way to work together online via different devices is greater than ever.

Diageo — its brands include Johnnie Walker and Smirnoff — worked with an advertising agency (and Huddle customer), AKQA, to develop an advertising campaign for its Smirnoff brand. Developing the ads involved a huge group of people — about 750 — from both companies. And Huddle boosted the team’s productivity by letting participants share their work across devices and countries.

Huddle’s reach is not limited to the corporate sector. According to Mitchell, the UK’s government announced its so-called G-Cloud framework services — a collection of office software such as word processing and email — and Huddle has been approved for inclusion in that collection. Mitchell notes that Huddle is “already being used by 75% of the central UK government.”

Huddle’s business model is a traditional one. It charges an annual fee that range from $20 to $40 per-user depending on the number and complexity of the features. Interestingly, Huddle tried a so-called freemium model — giving away a basic version of the service and charging a subset of users for a more sophisticated version. But that model failed.

The reason, concluded Mitchell, is that freemium models work better for consumer services rather than business ones — that involve group decisions. One company, Box.net, uses a staff of telephone sales people to try to convert the free users into paying ones. This approach, Mitchell concluded, was very “capital inefficient.”

In any case, its new business model is working well primarily because happy corporate customers recommend Huddle to others. In short, Huddle is growing virally — and that is generally a happy situation as long as the company can keep up.

Mitchell is a serial company starter. Before starting Huddle, he worked for a “big data” firm called Dunnhumby — it analyzed data for large retailers such as Procter & Gamble (PG) — where he lead a business that grew to $60 million in revenues in three years.

When the company was acquired, Mitchell left. He used some of the proceeds from the sale to finance Huddle’s initial operations in 2008. He wanted to solve a problem he had at Dunnhumby– his 300-person staff could not work together on projects through a single, easy-to-use system. Huddle was started to remedy that problem.

Huddle revenues have tripled or quadrupled every year since. Although he started it in the U.K., Huddle has spread to the U.S. and now 60% of the new business inquiries are from its former colony. It’s got an office in San Francisco and is opening another one in Boston.

The company has raised $15 million to finance its growth from Eden Ventures and Matrix Partners. And part of that money has been used to hire more people — Huddle now employs 75, that’s twice the number the year before. And by 2013, Mitchell expects 150 employees — half of the 75 new hires will be in engineering and half in business development — and a tripling of its 2012 sales.

As Huddle vies for a piece of the $25 billion market for content management and collaboration software, it is benefiting from 10% growth in the industry that’s propelled by an expected corporate shift to the cloud.

And with 70% of companies expected to float there by 2017, Huddle hopes to take share from Microsoft (MSFT) SharePoint by stressing its lower price and greater ease of use. In that year, Mitchell hopes Huddle will be a publicly-traded billion dollar business.

And to get there, Mitchell will encourage Huddle to keep improving its product to sustain its viral growth.  Mitchell believes that its February 21st launch of Huddle Sync, a service that uses personalization algorithms to send corporate files to workers as their locations change, may help to drive adoption.

And though it’s profitable, Mitchell expects that he will need to raise more money to accelerate Huddle’s expansion. But if Huddle can continue its rapid growth — assuming that its undisclosed revenues are big enough — Mitchell’s big goals could be in reach.