California dreaming

When Robert Castaneda, the founder of Sydney-based software company Customware decided to open an office in Silicon Valley last February – in the middle of the worst financial crisis in 70 years – every customer and industry affiliate questioned the move. “They all said I was crazy – every single person, bar the board,” Castaneda says.

But for him, the decision was a mathematical calculation. “Around 15% of our clients were in the US and because the Australian dollar was at US60c, that suddenly became 20%.”

“In a downturn, the key thing to do is to get close to your customers – and you can’t do that from Australia. So it’s not the time to be defensive. We saw it was more of a risk not to be there… and that’s paid off for us really well compared to our competitors who went into their shells. We haven’t laid off anyone, and we actually have six or seven positions open at the moment.”

The move to the US has paid off with several high profile contracts, including internal systems development for the Office of the President of the United States.

The company now employs 70 full-time staff across Australia, New Zealand, Singapore and Malaysia. It has 300 clients in more than 30 countries, with its biggest contracts worth more than $1 million. While Castaneda won’t reveal revenue, it is believed sales are more than $8 million.

The 29-year-old started the business in 2001, at the age of 21. It was a hard slog and Castaneda won his first contract through a “very difficult” student at a training meeting.

“He was very impatient, he was asking lots of questions, but I managed to deal with him… and at the end of the course he said ‘Look, I’m the business director of a fortune 40 company and we’ve been trying to get a solution in China for the past two years, and uh, what are you doing next week?’” Castaneda says.

As a new, ambitious company, Castaneda was keen to take on every project he could. One of the most important lessons, he says, was learning to pass on projects that didn’t fit Customware’s strengths.

“You need to say ‘these are the things we can do better, where we can produce a much better result’.”

The company, which completes all product development in-house (in Malaysia and Australia), specialises in collaborative solutions such as wikis and other collaborative tools from the Microsoft SharePoint suite.

Another key revenue stream comes from integrating systems, especially during mergers and takeovers.

“Unlike normal software development where you can have a really clean test environment, when you’re integrating systems together the test systems are generally not the same as the production systems. There are times when it’s very stressful.”

“We worked on a system in Japan that controlled a robotic warehouse: taking messages out of a warehousing system, firing them across from Australia to Japan, with a robot packing trucks automatically from pallets in a warehouse. Now, you don’t get much test data with that.”

The solution, Castaneda says, is accepting that mistakes are a normal part of business. “Then you can create a system that makes mistakes as transparent as possible, and picks then up early on.”

For Castaneda, balancing innovation with meeting targets is the greatest concern. “The most difficult thing to worry about is keeping everybody aligned on the same direction. Everybody has ideas and you want to allow people to innovate, but at the end of the day the company has its goals and everyone needs to contribute.”

To this end, the company spent the downturn overhauling every one of its internal systems. One initiative was the creation of a wiki that allows employees across the globe to contribute to development projects.

Customware has also automated client feedback in an internal blog that is sent to all employees. “That means it’s independent recognition, which carries a lot more weight than if I as the CEO were to say it. If a customer comes in and says: ‘Hey, what you did is wrong’, then we will have a whole thread of people suggesting how to fix it.”

As software companies increasingly adopt Web 2.0 technologies, Customware’s use of collaborative technology will become less of a distinguishing feature. Castaneda hopes to stay ahead by concentrating on cloud technologies, and expects the Silicon Valley location to improve Customware’s ability to adopt new technology. “We’re in a pretty unique position for an Australian software company in this sense.”

The company is now focusing on its export market, which has risen from 20% to 30% of its revenue in the past two years. (Castaneda is a finalist in the 2009 Premier’s NSW Export Awards, which will be announced later this year.)

And for the first time, it is looking at bringing in investors to fund further expansion. “We have a lot of US contacts interested in (providing private equity), we just need to work out what’s best for the business,” Castaneda says.