Duncan Lennox, CEO and co-founder, Qstream
In the Nineties, Duncan Lennox was in the vanguard of young Irish tech founders locating subsidiaries in the US. Now, he is bringing it back to Ireland with his Harvard spin-out Qstream.
Long before the current tech start-up frenzy, before there were any Web Summits and before an opportunist property developer dreamt up the Silicon Docks brand to rent property, the Young Turks of Irish software made their own coffee in kettles. They wouldn’t know a barista from a barman and usually congregated in the computer science departments of Irish universities rather than hipster coffee shops.
It was from such labs that WBT, Havok and Iona came into being, and planted the seed of an idea that Irish tech companies could go global. In effect they were in the advance guard of future generations of software start-ups that would make the US their home, including the Collison brothers’ Stripe.
It was as the CTO of e-learning company WBT that Duncan Lennox left the computer science department of UCD in 1997 and set up WBT’s first US presence in San Francisco before relocating to Boston.
Seventeen years later Lennox is still in Boston but his latest software venture Qstream has already created 16 new jobs back in Dublin. The company today raised US$4m in venture capital from renowned US investor Excel Venture Management and existing investors Frontline Ventures and Launchpad Venture Group.
A US$2bn opportunity
The funding will be used to accelerate the company’s expansion in the estimated $2bn predictive analytics sector, where Qstream combines the power of mobile, gamification and big data to deliver a new class of business intelligence that helps sales managers quickly and proactively align the behaviors of their sales people with growth initiatives.
Developed at Harvard, Qstream has been scientifically proven in dozens of trials to boost performance with impact to the bottom line. Using Qstream on any mobile device, users respond to scenario-based Q&A challenges via push notifications, followed by brief explanations that strengthen skills in minutes a day.
Speaking with Silicon Republic, Lennox explained the latest investment represents the second tranche of a US$6.86m Series A financing, which includes US$2.85bn closed in September 2013.
“As a start-up we went out and did something very unusual, we told our investors what we were going to achieve over the year ahead and then we did it.
“We exceeded every goal for 2014 and the business was screaming away and that led to us growing faster. When I spoke to you a year ago we had seven people in Dublin and I said we were going to grow that to 16 and we did that.”
Lennox said Qstream’s main business is selling to large enterprises, including pharmaceutical and financial giants, and the company quadrupled revenue in 2014.
The key to understanding what Qstream’s technology does is not to think of it as a training tool, but more as a technology aimed at changing behaviour.
“Training is just a process, the goal is to change behaviours. We have the most proven scientific methodology behind this.”
Another aspect of Qstream’s technology is its mobile uptake. “Last year 25pc of our users were using the mobile device and now that’s above 75pc of all users of the platform. So we’re well beyond the tipping point.”
Data is the new oil
Qstream’s technology makes clever use of analytics to help management teams make split-second decisions that will ultimately lead to a better-performing organisation.
“We look at things like the patterns of how people are answering questions over time in the sales force. We built the whole analytics engine that boils data points down and turns into a visual heatmap of the sales force and capabilities for senior leadership and at the sales management level, delivering insights.
“We call them coaching management opportunities whereby you go in when and where you are needed rather than get a report you will never read. It allows managers to come in with very specific coaching opportunities – the technology tells you that you have planned to spend time coaching Mary Kay but she is actually doing great but it is Duncan who is struggling when it comes to positioning against a new competitor, spend time with Duncan. It is very specific simple stuff that doesn’t waste people’s time.
“That analytics data part is something that people in large organisations have glommed onto in the last year.”
Focus on growth
Bray native Lennox said that while he was proud to be able to create new jobs in the city where he was educated, Dublin earned the investment on its own merits.
“We’re continuing to grow the organisation everywhere and Dublin is a core part of that. Dublin isn’t just for sales and marketing for Europe, we have a lot of engineering talent in Dublin both on the services and product side and network operations which runs the infrastructure.
“Last year with the money we raised a lot of it went into starting to scale the sales and marketing part of the organisation and across the board, this money will be more spread evenly across all departments but with an emphasis on engineering.
“We work now with some of the largest organisations in the world and we’re focused on the directions they want us to go in, which requires the best engineering talent.”
Lennox said there were solid business reasons for locating in Dublin.
“There is incredible talent in Ireland and we wanted to tap into that but definitely a joy to be able to do that and be part of that.”
The start-up guy
Seventeen years ago Lennox headed out to the US to open US office of WBT systems.
“We built one of the first ever learning management systems as they are called now. I wrote the original code for that in 1994 as a post grad at UCD.
“We spun that out of UCD. My two start-ups now are both university spin-offs, one from UCD and the other from Harvard.”
With his boots on the ground in America Lennox built up a considerable network of partners and customers.
WBT was acquired by Horizon Technology Solutions in 2006 which was in turn bought by global IT services giant Avnet for US$156m.
Life intervened and Lennox married and had a family in Boston.
It was in the aftermath of the acquisitions that Lennox was restless and wanted to start a new technology company. This was how its paths crossed with his Qstream co-founder Dr B Price Kerfoot, a professor at Harvard Medical School.
“I’m a start-up guy and was pottering around looking for start-up ideas and in my network built up over the years a friend of mine who had been at a rival company to WBT introduced me to the Office of Tech Development at Harvard – the university’s tech transfer unit – they had a professor from medical school who had developed this methodology.
“Harvard mostly licenses their tech to large companies like pharma companies – and there were not many software companies that came out of there.
“They were looking to somebody who knew the industry and see if there was a viable opportunity to create a spin-out.
“When I met my co-founder Price, I was really intrigued by the idea, I thought it was elegantly simple and solved challenges we had in the e-learning industry.
“Price and I sat down over beers and long conversations about the vision of the company and what we wanted out of the world and we discovered we got on really well and aligned with what we thought was potential for technology, and that’s how we got started.”
Bray to Boston to Dublin
Comparing a start-up in a college computer lab in 1997 with their counterpart today in 2015 is a little like comparing chalk and cheese. A lot of technology has happened from Web 2.0 to smartphones and we are only scratching the surface on what is to come.
The one upside that Lennox believes is obvious is the technological barriers to entry to the start-up world are much lower today.
“You can actually start a start-up in Ireland now and be successful. When we were doing WBT there was a recognition that you would have to move chunks of your company to the US because that was and remains the primary market for enterprise software.
“But because of the rise of services like Amazon Web Services that let you rent infrastructure as you need it as well as the availability of open source and app development frameworks, the cap-ex requirement has been removed.
“We ran Qstream for the first few years spending zero dollars on cap-ex; we never had to buy a server to put in a rack anywhere, we were able to rent the capability from Amazon and other places like that.
“The technology stack lets you focus your engineering talent on the core problem that your business is all about. Those things make a huge difference, and they really do help level the playing field for Irish start-ups. You don’t have to be in Silicon Valley anymore or have the big engineering team that you needed back in the day.”
He says the business environment in Ireland is also conducive to getting a start-up off the ground.
“We are now starting to build actual start-up ecosystems in Ireland. All the tools you need to create the legal entity, manage basic accounting needs like payroll, all the things that could have been distractions can be managed and sourced easily in Dublin.
“All those things that existed in Silicon Valley for a long time we now have in Ireland as well.
“Layer on top of that the high quality education, incredibly talented people coming out of UCD, Trinity and DCU – they are now able to focus their energy on their exciting idea and not have to worry about other necessary but distracting stuff.”
