After launching in 2006, UK tech company Huddle just raised $US51 million.
Huddle is a file sharing cloud service, like Dropbox or Box, but it focuses on enterprises like big companies rather than individual consumers. Huddle enables large agencies to share, save, and collaborate on documents online. More importantly, Huddle users can control who has access to which files, so it’s more secure.
That extra layer of security is crucial in lieu of the recent Sony hack and Edward Snowden’s trove of NSA documents.
Huddle isn’t really competing against Dropbox and Box, although it does gain business from them. Instead, its main competitor is legacy enterprise software such as Microsoft SharePoint, which companies have often been using for years.
The company’s client list is impressive. It works with Apple-owned headphones manufacturer Beats by Dre, international accounting firm KPMG, a host of US government agencies including the office of the Secretary of Defence, and around 80% of the UK’s central government agencies.
The company announced on Thursday that it had completed its series D fundraising round, bringing in $US51 million in new investment. That’s a giant sum for a UK tech company.
Business Insider met with Alastair Mitchell, Huddle’s cofounder and CEO, in the company’s London office to talk about its rapid growth, and the challenges of building software secure enough to be used on classified government data.
Business Insider: Why is Huddle’s office in a different part of London as opposed to the famed “Silicon Roundabout” tech cluster near Old Street.
Alastair Mitchell: We [used to be] right on the roundabout there, so we were literally, as you came out of the Tube, you’d see big Huddle offices with big windows and our names across them. But what’s great about that area is that it’s full of small, low-cost offices. But they’re small, right? So when you get to our size and you’re growing up and you need hundreds of people in an office, there just isn’t space enough. They’re all small offices, so you have to move down to towards the City, which is hilarious. 25% of all the new space in the City taken last year was actually tech firms, which is amazing.
BI: You were one of the very first tech companies to become part of the city’s startup scene. What was that like?
AM: When we started, seven years ago, there was really very little. The tech scene was very disparate, there was a bit going up in Cambridge, traditionally the kind of 1.0 stuff: Chips, hardware, and so on. But there was very little going on in London. There was a lot of media, as you know, a tonne of media, some fintech, but there was no real industry. And so we were one of the first to start going, and then there was a small group of us and the first generation of guys and a bunch of really great companies there who are starting to do really well on a global stage, which is great.
We got together, we spent a lot of time together, and gradually together we helped to build a bit of a scene, and then it has really accelerated from there. We’re very proud to be at the start of it, but we know it’s not because of us, it’s just everyone helped. There were many people trying to do the same thing. What’s great now is it’s proper, it’s real, it’s big.
BI: Does being a British company work against you when you go to win business in the US?
AM: There is no favouritism, there is no discretion against US or UK companies, the world is a much better place than that. But there are local favourites that are growing up with lots of VCs in their network investing in them. So you have to bust through that, and we’re doing that just like Box are trying to bust through that over in Europe with us.
BI: How do you differentiate yourself from companies like Box and Dropbox who are creating similar storage tools for companies?
AM: The first thing is that we do something different. Huddle is all about collaboration, and it’s all about security, and it’s all about large organisations and enterprises. The first thing is communicating that, and what’s nice about that is that this whole content collaboration space, sync and share, storage is huge, and it’s exploding. It’s a massive great market, and what’s happening is that it’s starting to mature, so you’ve got all the consumer guys who are getting great scale, but now being commoditised to hell: Amazon, Google, Microsoft.
BI: You mention security as one of your selling points there. How secure is Huddle?
AM: Control is actually what we care about as a consumer. So in iCloud I want to know…the thing that frustrates me about iCloud, and I’ve had it, is you take a photo, you delete it on one device, and you think it’s then deleted on all devices. It isn’t, you look at your iPad and it’s still sitting there as one of the things to be deleted. I’m like ‘I got rid of that photo!’
So it’s control that people want, so that is the same in enterprise. That doesn’t just mean IT, big bad IT, it actually means me as a corporate lawyer or as someone working on Apple’s supply chain. They care very much about not just security, which is becoming ubiquitous, but really who exactly can see my information as I transmit it.
Beats by Dre are a huge customer of Huddle and they have very similar issues around supply chain, new products coming out, they work with huge manufacturing centres in China, and they’re working on these for a year before they get released, and no-one must know about the new products.
So how do they ensure that the information that they’re sharing doesn’t get leaked? And that’s much more than just the security in the system, it’s about who has access to it, being able to say exactly the audit trail and the version control, knowing that if you look at a design on your mobile device, I know exactly that you did do that. And if you lose that mobile device, knowing immediately that it should be wiped from the device and no-one can see it. And if you leave the company that I’m working with, knowing immediately that you no longer have access. Literally the minute you walk out the door. Even knowing, and this is how extreme we get, which way your developers face. Do they face to the window or not? We work with a lot of government data, and guess what, who’s looking in through the window?
This is the lengths of extremes that big enterprise companies that really care about collaboration and security go to. And that’s why enterprises who are working with governments, but also work with people’s personal and corporate tax data, the most sensitive information, rely on Huddle. That’s real security, and that’s boring, right? It’s why, when you walk in the door, even though as a startup, a small, nimble, agile company, the security levels you’re going through to get into this office are pretty high.
BI: So if I’m an unhappy Beats by Dre supply chain worker in China and I want to steal some documents and leave, would I be able to do that if the company is using Huddle?
AM: No, that’s the point. Huddle will stop you doing that. And if you did manage to get anything, we would know what you’ve got.
BI: That kind of control must be attractive to governments as well?
AM: It’s very attractive to governments, it’s very attractive to large corporates, it’s very attractive to anyone who cares about their information.
So here’s the interesting paradox about security: Everyone is now more comfortable with the general security of systems. Do you remember back in the day when you first started using e-commerce? You would go in through some crazy banking system and then get redirected back. Then there was the ‘secured by’ the different finance organisations. Now you just have a little padlock, and no-one even bothers looking, you just assume that the payment site you’re going on is secure.
So the same thing is happening with security, everyone’s getting more comfortable with putting their stuff in the cloud, but, at the same time, everyone is getting much more paranoid about the control of that information once it gets into the cloud.
BI: If I’m a company in France and someone in the US views one of my documents, will I get an alert?
AM: Yes, you can do that, absolutely. Well you can control if you decide not, you can control that they can’t. So you can lock down access by IP, domain, by geographic location, by the data centre they have been invited into.
The idea of a huddle is that if you’re in the huddle, you can work with me, you can share my information. If you’re not in a huddle, you can’t. Now that’s huge because 99% of all the other systems out there, including our great competitors Box and people like that, are open systems. So in other words, if I create a folder, anyone can access my folder and get to it via a link unless I shut it down. It’s the reverse, it’s open by default, closed by permission. Huddle is closed by default, open by permission. If you Google enough, you can find Box and Dropbox links available on the web of amazing amounts of information from corporates because they haven’t locked it down, it’s insane. It’s terrifying.
BI: Do you do that when you go into companies and pitch?
AM: Yeah, and often we don’t have to because companies have done that themselves. Often the journey goes ‘we bought Dropbox because it’s great, and Dropbox is great, it’s a great system. Lots of people are using but we’re scared of security, just general vague security. So we bought Box because it’s supposed to be a slightly more secure version of Dropbox.’ And Box is great as well, they’re amazing guys, love ’em. But then they Google, and they look out on the web, and actually all these links are available out there in Box. And they’re like ‘Holy crap,’ you know. And it’s just a storage tool, so now we want to go to next level and they buy Huddle. So that’s a really common journey, and we pick up a tonne of customers on that journey.
BI: How do you change the software for use in government?
AM: Well the answer is that you don’t. That’s the reason why we’re so popular in government, it’s about 30% of our business so we’re not dominant, but it’s a big chunk of our business.
I was just at an event for the UK government with Francis Maude, who’s the cabinet minister, and Liam Maxwell who is the CTO for the UK government, and Vivek Kundra who is the ex CTO of the US government. So the great and the good. And we were one of only three people who they asked to present to the whole of this group. But the reason we’re there is because we’re not doing anything different for government. We are providing a system that is secure and useful enough for governments to use. Number two is it solves a real problem because government is very collaborative. It turns out they’re the most collaborative organisation you can find because they create policy. But thirdly, they don’t want bad software, no-one wants bad software and it just because you work in government doesn’t mean you want it. So what you do is you provide a great bit of software that works great, that is just as good as anything you’ve used at home, but that is available to a government user, solves a problem for them and, importantly, it’s secure enough for them. And that’s actually the difference.
Really, what we do is we spend our time getting all the security and accreditation so that they can use it. But it’s the same software. And that’s really important. The great thing is that by doing all this work on security and accreditation for government, everyone else benefits. So that’s why KPMG come and use us. They think ‘Well, hang on, if you’ve gone through all this work, that’s the best of the best, so we get that benefit as well.’ But that’s the great thing about the cloud: Once you’ve done it for one client, you’ve done it for everyone.
BI: Would a military ever use Huddle?
AM: Again, it depends on what you’re trying to share. So, no, we don’t have [them]. They tend to work at levels of security that are way higher and work on very small, very discreet networks, to the point where you literally have to be in a room in a building in Langley. It’s that level of encryption. So no, we don’t work with that, but we do have the office of the Secretary of Defence working with Huddle, but it’s not for military purposes. It’s relatively, for the government, unclassified information, and it’s all about families and people working together and so on.
BI: So the US government has around six different levels of classified information, and that sounds like, I believe, levels one to two. Which levels of classification does Huddle work with?
AM: We’re up to about the middle of that, about three. We can offer for it for zero to three.
BI: So Amazon does levels three to four?
AM: They have their own data centre that is designed for the Department of Defence that is three to four. No-one really does it at scale above that. Most of the information that governments work on are nought to three. Some cases up to four.
BI: How is working with the US government different to working with the UK government?
AM: It’s very similar, except, and here’s where I would big up my home country, the UK government is doing some amazing things, actually.
The US government lead the way. Vivek Kundra, who worked for Obama, came in and said there should be a cloud-first policy in US government. We run thousands of data centres, we’re spending hundreds of millions of dollars a year in one department on things like Sharepoint legacy technology, that should stop. We should move to the cloud. They lead the way, which is amazing, but the UK government has really accelerated it and what they’re doing, which is very interesting, is creating platforms, they created a whole G-Cloud procurement framework so small businesses can sell to government more easily, they’re on a real push to really be much more agile, develop their own services, break up huge SI contracts. They’re actually very similar, they’re trying to solve the same problems, cost is important, value, delivering real news technologies, but the UK government is actually one of the most leading, if not the most leading government globally at this stuff. It’s phenomenal.
Believe it or not, the other one that’s amazing globally is Estonia. And if you ranked them it would be Estonia and the UK first, then you’ve got people like South Korea, New Zealand is very very advanced, then the US and a whole bunch of others.
BI: The Estonian government is easier to work with than the US government?
AM: They are revolutionary, the way the Estonian government works. It’s a small country, about a hundred million people, so it’s easier. For instance, they’re launching a completely open ID system which allows you as an Estonian citizen to access all your systems online, which now the UK government is doing. It’s brilliant, really really revolutionary. The US government lead the way, though. They just have huge scale, so we’re delighted to work with them, and we work with four of the biggest agencies now in the US government.
BI: So how long will it be until a Huddle IPO?
AM: We’re probably a few years away from it still. But who knows, we’re growing really fast. It’s an extraordinarily rapid rate at the moment, which is very exciting. There’s lots of of news to announce in a while. Lots of things to do. Honestly, we’re just focusing on building a big business fast. Really fast.