INNOVATORS VS COVID 19
Maarten Verwaest CEO and Founder at Limecraft shares the Secret on how the Media and Entertainment Businesses are Reinventing themselves
First of all, how are you and your Family doing in these COVID-19 Times?
Maarten Verwaest: We are in excellent shape. More online and less physical contact, but that’s not necessarily a bad thing and probably something we better get used to. It may be possible that we went too far, and I hope it will balance in due course.
From a societal and macro-economic point of view, it is, in fact, a gigantic experiment, and in a way, I’m excited to experience all of this in the front row. One of the less obvious results of the COVID-crisis will probably be that we will use a different type of business plan in the future, with less emphasis on growth and less acceptance for large losses and more focus on running sustainable businesses that are more resilient to a certain extent.
Tell us about you, your Career, how you founded Limecraft
Maarten Verwaest: Our company is active in the media business, and we service some of the largest brands all over the world. Prior to incorporating Limecraft, the founding team knew each other, as we were colleagues in the R&D squad of VRT (one of the Belgian public service broadcaster).
While we were 100% confident that we knew the market from the inside out, we encountered several challenges between incorporating the company and the break-even milestone some 18 months ago. However, we remained confident at all times; we carefully listened to our customers and adapted the product to be a better fit with their requirements. Eventually, we reached a point where we are the indisputable leader in terms of usability and functionality, and if you look at the current stats (consistently growing 12% per month in the last 18 months), this strategy clearly pays back.
Our lessons learned: bootstrapping is not always easy, but it keeps you razor-sharp and susceptible to essential things. Also, the most critical milestone for a tech company is to get break-even. After all, it’s proof that your product and your business model are fit for purpose, isn’t it?
How does Limecraft innovate?
Maarten Verwaest: Around the time we started, we developed a solution waiting for a problem (i.e., cloud-based media management, workflow automation enabled by AI). While this was a very controversial offering 10 years ago, many things we proposed are now becoming commodities. And in a way, COVID-19 for us is a boon; we say the demand for online editing and collaboration explode.
Since the time we launched the company until today, we innovate by speaking with the right type of customer. We are always scouting for “early adopters” for technological or other innovation, and we amortize R&D cost over 2 or 3 early adopters. These get a lot of value for money, for us, it is a way of financing further product development.
The key difference with traditional R&D is the interaction with the customer. By organizing ourselves this way and to engage in co-creation, we are sure about the product-market fit before we start the actual development.
How the Coronavirus Pandemic affects your Business, and how are you coping?
Maarten Verwaest: Limecraft will be one of those companies that stood up and walked through the storm. We have been shipping solutions for remote editing and collaboration for 10 years, but we had a hard time competing with traditional software businesses.
COVID-19 made it clear to the community of producers that online collaboration is not a nice-to-have or an add-on; it has become the backbone of the value chain. Since March 1, we saw the traffic on our website tripling, and we can’t keep up with the demand to board new customers. So we are now aggressively hiring, with the intention to double the team in a year.
Did you have to make Difficult Choices, and what are the Lessons Learned?
Maarten Verwaest: At the beginning of the crisis, we had a team meeting, and we made a shortlist of possible actions, in case we would have to deal with a liquidity problem. And we experienced some customers that had difficulties in paying their invoices indeed. However, the increased demand rapidly outpaced the negative effects, so we didn’t have to consider any layoffs at all.
The lessons learned are the following. 1/ stay out of the event or airline business and that your product is a solution to an urgent problem. This should always be the case, but a strong societal crisis is an opportunity to make that clear. 2/ Make sure your business development is done prior to a crisis. As there are no trade fairs anymore, you have to sit on a database of several 10.000’s of contacts that you can approach online as well. 3/ Your business model must be intrinsically healthy, i.e., cash-flow positive or cash-flow positive within reach at any time.
How do you deal with Stress and Anxiety? How do you project yourself and Limecraft in the Future?
Maarten Verwaest: As an entrepreneur, you always have to deal with stress. In good times as well as in challenging times. Life begins at the end of your comfort zone. If you don’t feel comfortable with that or if this doesn’t give you the energy to perform better, you better look for another job.
Limecraft is on a mission to become the largest backbone for audio-visual production. In a networked economy, the winner takes it all. I predict that our industry faces a great extinction, whereby a large cohort of traditional service companies will be dematerialized and consolidated into larger groups. Either they adapt, or they will be obsolete. As our company provides the software framework to do so, and not to take over their business as such, we are well-positioned to obtain a leading role.
Who are your Competitors? And how do you plan to stay in the Game?
Maarten Verwaest: Competition is mostly from traditional software vendors. They have the market and the customers, but their product is sometimes outdated, and their commercial model is for sure. In the area of more modern software as service players, the market is very fragmented, and the biggest hurdle to adoption, as conveyed by our customers, is the effort and the liability incurred by the integration of the different point solutions.
Limecraft offers a whole solution with a core product that lives in the cloud. We integrate any services available on the market if possible, and we develop the user interface on top as well as the missing bits. By doing so, we have achieved a solution that is up and running in hours rather than weeks, and from there on, it is a fully managed service.
Your Final Thoughts
Maarten Verwaest: I’m sure that, as a result of the economic and societal crisis, the valuation of tech companies will be fundamentally different. Pre-COVID, SaaS (software as a service) companies were primarily valued based on growth potential, and to execute, they were consuming insane amounts of money coming from debt and equity funding. Post-COVID, I believe that companies’ valuation will be based again on their ability to demonstrate a sustainable business model rather than to burn as much cash as possible. Time will tell.
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