London

A star rises from Britain's tech scene

March 11, 2014: 11:33 AM ET

The business collaboration company Huddle serves some of the world's largest companies. It's also a success story for London's growing tech startup scene.

By Jonathan Weinberg

Huddle co-founder Andy McLoughlin sees promise for the tech startup scene in his home country.

Huddle co-founder Andy McLoughlin sees promise for the tech startup scene in his home country.

FORTUNE -- The startup Huddle has a Silicon Valley-style name, is used by several branches of the U.S. government, and has offices in San Francisco, New York, and Washington, D.C.. But look a bit closer, and you might be surprised to discover that the cloud-based collaboration company is actually British.

About two-thirds of the company's 170 employees are located at Huddle's East London headquarters, just a tube ride away from the South London pub where the company was conceived seven years ago.

The company's rise has been meteoric. Huddle now has more than 100,000 businesses worldwide using its software-as-a-service content collaboration platform, including Procter & Gamble, Unilever, and Kia Motors. Its namesake product promises to help teams work more effectively and securely together, whether editing documents, managing tasks, or sharing files, across devices, from desktop to tablet.

But at home, Huddle is known best as a British startup that made it.

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Huddle came about after co-creator Andy McLoughlin became frustrated in his job as a consultant, spending his days implementing document management and business process systems for insurance and finance companies.

"Every single business used systems for archiving and record management," he said, "and each said they wanted a tool alongside this to easily collaborate with internal and external teams."

It wasn't until he met with friend Alastair Mitchell -- now Huddle's CEO -- that the idea took off. Alastair had been trying unsuccessfully to implement Microsoft SharePoint. The duo quickly became intent on making a new system that was far more "intuitive and attractive" than what was on the market. Instead of the clunky interfaces and workflows found on traditional business tools, the pair sought an experience that was more akin to that of consumer software.

"The notion of the traditional office has broken down -- employees don't just work between 9 and 5 inside four walls," McLoughlin said. "Huddle allows teams to be productive wherever they are, even if some of them work at different companies."

He added: "We also understand that users expect the software they use at work to be as intuitive, well-designed and -- gasp -- fun as the tools they use in their social lives."

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To date, Huddle has conducted three funding rounds, and has raised more than $40 million. The company now services 80% of Britain's central government, McLoughlin said, making Huddle one of the largest deployments of cloud software inside the upper echelons of U.K. decision-making. "It's terrific," he said.

That privilege comes with serious responsibility. With so much sensitive third-party data and information in its cloud, security remains Huddle's top priority, McLoughlin said. "Security and compliance is absolutely paramount," he said. "We pride ourselves on data center security, encryption, and data sovereignty with centers in the U.K. and U.S. and all key compliances in place."

A guide for westward expansion

McLoughlin hopes that Huddle's transatlantic success will inspire other British startups to look westward for growth.

"From day one, we have always tried to position ourselves as an international business," he said. "It helps the name is quintessentially American-sounding. People assume if you are called Huddle you have to be from California. The brand has really been a big part of the success. Traditionally British enterprise companies haven't been good at branding and brand awareness, and we've concentrated a lot on that."

Partnering with existing U.S. companies also helped Huddle enter the market, McLoughlin said.

"Being able to launch the product in the U.S. with significant early partnerships with HP and LinkedIn, especially when we were just a very small company based in south-east London, was key. Obviously a lot came down to the quality of the product but also a lot of hustle from Alastair and I not being afraid to go and have those conversations with these big American players."

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It's important for British startups to not get intimidated by the aura of Silicon Valley, he said. It's far better to take what works and learn from it.

"A lot of British companies struggle with having the confidence to really put yourself out there," McLoughlin said. "When you look at American companies you realize the very best American leaders have a mixture of operational excellence but also showmanship. Look at someone like Marc Benioff of Salesforce.com and Larry Ellison of Oracle. These are fantastic operators with an element of showmanship which you tend not to see so much in U.K. and European leaders."

Still, Huddle started locally. Its first venture capital came from U.K.-based Eden Ventures in 2008, when the global economy was retracting. Only later did the company pursue U.S. investment.

"The investment we took in the U.K. was classic early stage," McLoughlin said. "We were basically two guys in a room with little more than a beta software product and a grand vision. What we found when we came to the B round when we had traction, customers, and revenue, was the American investors were a lot quicker to move. Americans are prepared to take more risk and bigger bets than British VCs. It is changing, but traditionally the Europeans have been more risk-averse. They want to dive in to the metrics and really pick apart the business before they are comfortable talking about investment."

In 2010, Huddle felt it had enough traction to open its first U.S. office in -- where else? -- San Francisco.

"Being a British company in America has pluses. People tend to assume because you have a British accent you are more intelligent than someone with an American accent," Andy said with a laugh. "That is massively untrue, but we're not going to dissuade them of that notion."

Giving London a harder look

Britain's technology scene is far more robust today than it was when Huddle was founded, with an increasingly vibrant "Silicon Roundabout" in East London. It's very encouraging, McLoughlin said.

"When we first started in U.K., there wasn't a big tech scene," he said. "You could count the number of notable startups on one hand such as LastMinute.com, Wonga, Mind Candy, and Moo."

Today, London's scene is much closer to -- albeit smaller than -- Silicon Valley's. It's a great place to have your base of operations, McLoughlin said.

"London is much cheaper to run an operational team at scale," he said. "Talented engineers are anywhere between half and two-thirds of the cost in Silicon Valley. That tends to surprise people. The other benefit is the U.K. has close access to talent in Eastern Europe, and people can fly in and out because of mobility of labor. In the U.S., the talent pool is U.S. workers unless you are big enough to sponsor workers."

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It's slowly becoming more of a two-way exchange between the San Francisco Bay Area and London, McLoughlin said.

"U.S. businesses such as Yammer, Dropbox, and HubSpot are already coming to places like the U.K. and Dublin to build out secondary engineering centers," he said. Plus, "there is a really nice cultural overlap between the U.S. and U.K. and Ireland than, say, dealing with India or China. It is the perfect place for a second team especially if you are looking to sell in to Europe."

Still, there remains much work to be done in Britain to build out the country's burgeoning startup scene.

"What London needs is a number of notable exits," McLoughlin said. "Seeing a few of the first wave such as Wonga, Mind Candy, or SkyScanner getting to IPO will give confidence that British and European startups can go the entire way and be successful. What we will then see is more investment through angels or acquisitions, then you get the virtuous circle you see in Silicon Valley where people make money and because someone invested in them, they return the favor."

With more Huddle hires on way, McLoughlin says he has an eye on an eventual initial public offering.

"It has been an incredible journey," he said. "As the company has grown and matured, it has felt like a different job each year from the initial incubation stages through the growth, and now it is all about the execution, alignment, and product management and really turning it into as big a company as we possibly can. Who knows what is going to happen in the next few years. It is going to happen at some point. I just don't know when."

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