Sale to Microsoft: GreenButton boss speaks out

Microsoft NZ chief marketing & operations officer Frazer Scott: Entrepreneurs like Rod Drury have sold startups to international buyers, then reinvested profits in new ventures in NZ
GreenButton founder Scott Houston: "This is going to be a shot in the arm for other budding entrepreneurs who want to realise a global vision"
NZVIF CEO Franceska Banga: "The return to NZVIF exceeded all government funding support, not just the NZVIF return. That money will go straight back into backing another five to 10 companies."

KeallHauled

Chris Keall

GreenButton founder and CEO Scott Houston says his Wellington company's sale to Microsoft should be celebrated.
 
The sale is another in a long line of NZ tech companies that have just started to hit their straps, but then been snapped up by an offshore giant.
 
Is this a great result for NZ Inc, or Microsoft Inc?
 
Joining Microsoft NZ chief marketing and operations officer Frazer Scott to speak to NBR the day before the deal went public, Mr Houston says the sale will help GreenButton achieve its global ambition.
 
"We want GreenButton to be the ubiquitous interface for users to access the cloud, and this market is growing really significantly and we saw this as an opportunity to be not just part of but integral to an organisation we believe will be a leader in the cloud space

"We have the ability to keep the team in NZ, and innovate, but have the resources of the world’s largest software company right behind us."

He added, "The important thing is, the PAYE, the income tax, the GST, isn’t going away. The rent that we pay, the salaries we pay. Every single person who was working for GreenButton in New Zealand is now working for Microsoft."
 
Committment to keep staff in NZ
For some techs sold offshore, including Navman, and NextWindow, early promises to keep staff in New Zealand quickly faded. LazaTech has led a biotech drift offshore, relocating most staff to Chicago. Not just intellectual property and future profits but jobs are lost to NZ.
 
Mr Houston says that won't be the case with GreenButton.
 
"Microsoft has been very clear about that. They understand the dynamics of the team, and the innovative culture that we’ve got and they don’t really want to change that," he told NBR.
 
"Microsoft has been very clear that for the foreseeable future the team will stay and work out of NZ."
 
Exiting stage left
But while 18 staff will continue to work in Auckland and Wellington under the new US owner, Mr Houston won't be one of them — at least not beyond the transition.

"This has been a 10-year journey for me but it’s been my baby so I want to stay on and help with the transition probably through toward the end of the year. And then frankly I want to spend time with my family and friends here in New Zealand and see what happens

"I’ve had a great relationship and it continues to be a great relationship with Microsoft and I’m sure that will continue post the acquisition and wherever I land next."

Aquisition by osmosis
Mr Houston has spent a lot of the past four years in the US as his company — founded in 2006 — has developed what he calls a deep relationship with Microsoft, centred on the US company's Azure cloud computing platform.

GreenButton's technology, which helps high-performance cloud computing and big data crunching, is now used by marquee customers including Boeing, Nasa and Pixar.

"The US is the centre of the cloud universe," he says. 

"We’ve seen significant growth from overseas customers, and a lot of that's been driven by Boeing," he says.

With such a closer relationship with Microsoft (which will now build GreenButton's intellectual property into its Windows Azure cloud platform), the sale was the natural next step, Mr Houston says — but he's coy on who made the first move.

A BizSpark of success
For his part, Mr Scott says Microsoft is offering broad support for NZ startups.

More than 700 local companies have benefited from the BizSpark program, he says.

And Mr Houston says the scheme was a boost for GreenButton.

"Having access to Azure, to the technology, and to the software licenses [under BizSpark] really made the difference for us," he says.

What's his theory?
Why does Mr Houston think so many startups get sold offshore?

"I think there’s a variety of reasons but I wouldn’t necessarily think of it as a negative," he says.

"If you look at the economy of Israel, and the incubators there, it’s really celebrated. And in Silicon Valley, for that matter.

"And it isn’t the same for all companies. New Zealand’s had a lot of success with Xero, SLI and Wynyard Group all listing all listing on the stock exchange. Our vision is really all around the cloud so we saw this partnership with Microsoft as … we thought it would give us the opportunity to reach our end goal which is for GreenButton and our technology to be pervasive across the global marketplace."

Microsoft's Mr Scott adds, "Bringing in international investment frees up money for local investment by people like Rod Drury [who sold sold his first two startups, Glazer Systems and AfterMail - the latter to a North American buyer] who have gone on to the next big thing. So it’s that continual cycle of innovation and reinvestment."

Happy with return on investment
While no numbers have been released around the deal, Mr Houston says it's a positive for the company's financial backers, who include Movac, ICE Angels, NBR Rich Lister John Holdsworth and, via the Crown-backed NZ Venture Investment Fund (NZVIF), the NZ taxpayer.

"Not only is it a great success for the team, but for our investors, from the early angel investors back in 2009 to local VCs it’s been a real ‘NZ Inc’ story and I think I can say all of the investors are very happy with their return on investment," he says.

NZVIF CEO Franceska Banga won't reveal any hard numbers, but says "The return to NZVIF exceeded all government funding support, not just the NZVIF return. That money will go straight back into backing another five to 10 companies."

Which is good — but still begs the question: why do so many tech startups get bought by US companies rather than going to a local trade sale or IPO, or attracting heavyweight NZ investors? Why are Xero an Orion Health the exception rather than the rule?

"It shows the opportunity for other New Zealand startups to that they have the opportunity to grow and become part of larger organisations and be acquired or partner with global organisations," Mr Houston says.

"So I think this is going to be a shot in the arm for other budding entrepreneurs who want to realise a global vision."

ckeall@nbr.co.nz

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