Philadelphia Business Journal - AppLabs tests the philosophy of single-minded focus
June 15, 2007
Shipping defective product to your customers seems like a bad idea. Yet that is the norm in the software industry. You write some code, sell it, wait for the bugs to turn up and then send out patches.
For some weird reason, software users keep putting up with this, despite the costs in terms of lost productivity, unhappy customers and software upgrades and replacements.
Sashi Reddi has a better idea. "When you look at the cost of poor quality, the focus has to be on fixing those problems up front, before you start unrolling that product into your business," Reddi said.
As CEO, chairman and founder of AppLabs Technology, Reddi has successfully made this pitch to some of the biggest software users in the world. He has built a $100 million Philadelphia-based business by putting code through the ringer, testing software for functionality, reliability and all-around competence.
With about 100 U.S. employees and another 1,300 in India, the firm last year made a major international move, buying IS Integration of the United Kingdom and doubling its revenue in the process.
"Up to that point all the customers we had were in the technology space, and almost all of them were in the U.S., so we wanted to expand: We wanted to have a presence in the U.K., and we wanted to expand into the financial industries" where IS Integration had a strong presence, Reddi said.
The financial space seemed a natural fit for a quality assurance firm. As Reddi put it, when you are dealing with other people's money, everything is critical. Software has to work, and it has to be invulnerable.
With this premise, AppLabs has picked up some significant financial-sector clients, including the American Stock Exchange and Royal Bank of Scotland.
Software users trust Reddi in part because he is independent, testing in his own labs and not beholden to any software maker. They trust him, too, because of AppLabs' commitment to documentation. The firm holds a high-grade certification in CMMI, a rigorous process-improvement certification. That means its every move can be tracked and verified.
"At each step of the way we document everything," Reddi said. "There are reviews by different teams, there is a set of things we have to do, and there are no shortcuts."
This devotion to process is a key driver in AppLabs' success. "I know I have to send a status report every day to the customer, and then there is a weekly report, a weekly call that has to happen to all the stakeholders," Reddi said.
"Then there are documents all along the way that have to be checked off at different stages by those who are engaged in the process. These things are non-negotiable. It doesn't matter where you are or who you are working for. That is the piece that holds things together. Otherwise it is pure chaos."
In addition to this process, the company also has won kudos for its single-minded focus. "Nearly all of their business is outsourced testing," said industry analyst Carey Schwaber of Forrester Research Inc. of Cambridge, Mass. "Their competitors have testing business units, but testing isn't their sole focus."
It helps, too, that the company has been strongly capitalized in its bid for overseas expansion. Following a $7 million round of venture funding from Westbridge Capital, AppLabs recently drew a $10 million investment from Sequoia Capital India.
"We are very pleased with this investment and it is likely to be one of our most successful investments in the cross-border arena," said Sandeep Singhal, a managing director with Sequoia.
In can be hard to think of AppLaps as a small, growing business, but that's how things are, at least in the mind of the CEO. After all, it was barely six years ago that the entire staff consisted of just five people, including his wife.
Reddi is proud to note that all those original players are still with the company. Why does that matter? Because, he said, it is a sign that his basic ideas about business are succeeding. Simply put: "As long as you have the right team with you, as long as there is trust, then you can do really wonderful things."
As is often the case with high-level business advice, this comment is kind of vague.
What do the most successful business leaders mean when they talk about "teams" and "trust?" Forget about financing, forget about international strategies, finding your niche and all the rest. The best word for Reddi's philosophy comes from the Yiddish: mensch, to act as a good person.
"Success comes from the basic way that you do business," Reddi said. "If you approach everything with the view that what you are doing is what you have committed to - if it is fair, if it is right - then the people with you will see you as a guy who does that right thing, and they will do the right thing, too.
"I think that is important."
Adam Stone
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