RedPixie: More consolidation to come in the Born in the Cloud space

RedPixie takes part in CRN's Born in the Cloud series

In the final days before Christmas last year, many resellers were winding down for the festive season. But for born-in-the-cloud players Cloudamour and RedPixie, that could not be further from the truth, as the duo was busy thrashing out the final details of an acquisition, which saw the latter snap up the former on 23 December.

Cloudamour was set up in 2012 by former The Internet Group (TIG) man Mitchell Feldman (pictured), who grew the business and achieved recognition from a number of sources - in 2014 the firm was crowned Microsoft's Worldwide Cloud Partner of the Year, and last year, Feldman was invited to Downing Street for a reception with the chancellor in recognition of his commitment to the technology sector and hiring apprentices.

Although the company was enjoying significant success on its own, Feldman said being snapped up was the savvy move for the future.

"As we got bigger, I realised I couldn't be all things to all men and actually, the company was becoming slightly bigger than I was," he said. "I needed to employ better, more experienced people."

Four months on from the union, Feldman runs RedPixie as its CEO alongside the firm's president Simon Bullers. Feldman said the Born in the Cloud space is ripe for similar M&A activity in the future as larger, traditional partners which have struggled to get to grips with cloud look to the experts for help.

"The acquisitions and consolidation will come from companies which do not have cloud offerings who are late to the market - they will buy a ready-made partner," he said. "There are a number of LSPs globally who don't have SI capabilities - they have understood that cloud is the way forward for them.

"Eventually, there will be some consolidation in that part. But we have also seen things such as Accenture and KPMG buying different partners. We are seeing that, where they want to bring in these specialist skills."

He admitted that RedPixie is well positioned for such activity and as a result, has received "a number of offers", which it has turned down.

"[The offers have been] not from the really big guys, but big enough to make us think," he said. "But we are not ready yet. Even five years on we still feel like this is embryonic. Never say never, but we don't think it is right now. We have gone from zero turnover to £6m in five years with zero investment - except for blood, sweat and tears."

Pledging allegiance

Whereas many traditional resellers will work with a number of vendors, born-in-the-cloud outfit RedPixie counts Microsoft as its key strategic partner, due to what Feldman claims is its vastly superior technology. He acknowledges that aligning with a single vendor can be risky.

"If you wanted Sky television in the 80s and 90s, you had to go to Dixons," he said. "They had a fabulous business. It's like Microsoft doing it through partners. The problem is, one day Sky said 'thank you very much, Dixons, we're now going direct to the consumer; we don't need you anymore'. And that was their biggest income - Sky television. So I am mindful of that."

But he insisted his entrepreneurial spirit mitigates any risk.

"That is why we started to move into areas which couldn't easily be commoditised, such as data science and big data," he said, explaining that some staff are developing a facial-recognition product based on the areas.

"It is so bespoke and so unique for each use case, that that is where we wanted to go. We started to create a number of bits of IP - most of which co-exist with the Microsoft ecosystem. We don't look at [Microsoft] as a foe, we look at it as a friend. One of the qualities of an entrepreneur is being able to see into the future. To have that vision to see where there are opportunities and risks and to be absolutely honest with yourself and - excuse the pun - not living in the clouds."

Prior to his time running cloudy firms, Feldman founded and built up TIG. He said the two business models are miles apart and that company culture is the biggest differentiator between the two.

All the technology RedPixie sells is used by the company itself, and staff are encouraged to use the products to enable them to work remotely, which Feldman says is seeing positive results.

"One of the things that has changed from my old era to today is the culture of the business," he said.

"Working from home has always been a vision that people want. Now it is easy. But we had to make a change as a business and measure people on output, not on input. Not 'what have you done today? Where is your time sheet?' It is now 'you can work from home - this is what we need doing and this is when we need it done by. I probably work better at home or in Starbucks listening to my headset. I don't always work well in the office. So giving people the ability to work where they want gets better results."

Feldman said that in the past five years, just one staff member has left RedPixie, which is an "incredible stat" that speaks to the company culture.

Although very different to his traditional roots, Feldman said he has always been confident in the born-in-the-cloud business model.

"I knew it would be a challenge and I knew it would be hard in the beginning," he said.

"I am evangelical about the cloud and people were like 'there's that lunatic talking about the cloud again'."

"I knew that... when it became mainstream, I would prevail as a market leader. I didn't see it as a risk; I saw it as an opportunity."