A Rising Star Toronto Tech Startup: Archon Systems is a Canadian Inspiration
It can seem almost impossible to open a newspaper or visit a Canadian business news site these days without being bombarded with the pessimistic mantra that Canadian businesses (and entrepreneurs) are risk-averse, conservative and doomed to play second-fiddle to our southern neighbour in the innovation orchestra of the online world.
Here at Dx3, however, we don’t buy into that kind of thinking. That’s why we recently unveiled our “Made in Canada” series. Each week on the Dx3 Digest, we highlight a Canadian startup that took a chance, dreamt big and is now stepping boldly into the global marketplace.
About Archon Systems
In the long list of companies to talk about, one that specializes in “inventory management systems” might not, at first cursory glance, jump out as the most exciting or intriguing. This was certainly my impression before I had the chance to sit down with Stephen Fung and Louis Leung of Archon Systems, but by just a few minutes into our conversation I quickly found my first impression was well off the mark. Instead, talking with the founders of this software startup revealed the story of two Canadian entrepreneurs who leveraged their Silicon Valley experiences and technical know-how to build a fledgling Canadian software start-up into a massively successful enterprise with global dominance in its reach.
Since its founding in 2005, Archon Systems has built a client list that boasts over 350,000 small businesses (spread over 60 countries) while also becoming the world’s most downloaded inventory software. Additionally, the Toronto based company also cracked this year’s ProfitGuide’s Top 50. What really stood about to me about Archon (and its founders) however, was not what, but how it had achieved its success. With a relentless focus on its customers and employees, there is a significantly more human side to the tale of Archon Systems than might otherwise be expected.
The story of Archon begins in 2003 when Stephen and Louis met while interning in Silicon Valley. Although Stephen went to work at Google and Louis got into bioresearch in India soon after, by 2005 they had a lead on an opportunity to build inventory management software for a company in need. It was a huge undertaking but it paid off: not long after they were contacted by another large business that happened to be looking for something similar.
According to Stephen, it was a hint of things to come. “That first project made us think: woah! Both of these companies seemed to want the same thing, but there was no easy and effective solution available that they could use. So we decided to make a product that filled this gap. We realized there was nothing accessible or user-friendly for the smaller business market.”
In 2007, the dynamic duo released InFlow — their flagship software that would go on to become to the world’s most downloaded inventory management software. It’s been the driving force behind their business and, as Stephen put it, “Growing that product…making it better and better… that has always been our focus” .
At it’s core the chronicle of Archon System’s early days is really about how Stephen and Louis recognized a way to stand out from the crowd in their industry.
“Part of the reason we got into inventory management”, recalled Louis, “was because we were doing market research and we saw 20-30 solutions, so we knew inventory systems were nothing novel. But we knew we could take a very fresh and new take that no one else was offering.”
Louis went on to explain that “any time you have these very hard stereotypical images about what something is, there is a huge opportunity to bring a more human friendly approach to it. Business software does not have to be boring. To prove that, we put a lot of emphasis on the design, the colour and the usability of our product.” The result was that InFlow caught on like wildfire in an industry not typically known for such colourful similes.
Designing and building InFlow came easily to Stephen and Louis given their backgrounds, but a major hurdle they faced appeared in the form of distribution and marketing.
“Getting the product out there was new to us,” said Stephen. “We didn’t even have it figured out by the time we launched. We posted inFlow to a bunch of download sites to build our search engine ranking. We even set up a free admission for a smaller businesses to get it out there.”
At first glance, giving out your product for free might sound like a risky venture for a company that is already a small start-up itself. There was reason to the madness though. “Our motivation for this was two fold: if they’re really a small business, they’re doing it as a hobby or getting started so we wanted to help them out. The other was great marketing. If they do grow and succeed, we knew they’d grow and continue using us so that we could grow along with them.”
By this point you’re probably starting to see what I meant by the human side of this company and its value.
In terms of funding, early Archon Systems very much embodied the image of a scrappy bootstrapped startup built from the ground up. As Louis described: “when we started we worked from home. We’d have meetings over dinner and there’s pros and cons to that. The main challenge we faced though was that we didn’t have any money. We were two guys in a garage without rich parents. We didn’t even try to get investors and did the whole thing ourselves. With that kind of process you have a lot of personal pain but because of that we have a very personal connection to our users who are small businesses trying to make it because we’ve been there. We know how they need to save every dime. Our early experiences really gave us good insight.”
The fact that their early challenges kept them grounded has greatly contributed to their down to earth approach to managing their product, their prices and their staff even as the company has taken off.
On Being a Startup in Canada:
When it came to discussing the entrepreneurial atmosphere of Canada, it was reassuring to hear encouraging praise from Stephen and Louis about their experiences.
“Canada is great country,” said Louis. “You have a lot of highly educated talent. Schools like UofT, Waterloo and more all produce awesome people. I think Canada is very competitive for this reason.”
Due to their shared experiences in Silicon Valley (both spent time there as interns), I asked Louis how he thinks Canada stacks up against the lauded promised land of tech startups. His response caught me off guard.
“I think it’s actually better to start a tech company in Canada because in Silicon valley you’re competing with tons of other shops that might be really similar to yours. In Canada there are far fewer competitors even though they’re just as high quality as the Silicon Valley guys. But when you add on few competitors and the tons of great government incentives for new tech companies in Canada it’s really a very good place to do business.”
Advice for Other Aspiring Entrepreneurs:
Next, I asked Steve and Louis for advice that they might offer to other aspiring business creators and they subsequently extolled the virtues of looking beyond obvious opportunities and embracing failure from day one.
“When deciding to start a business it can be tempting to follow the crowd and chase obvious opportunities,” began Stephen, “but with our business one thing that helped is that we didn’t follow along with hyped trends like getting investors, pumping tons of money into ads and marketing and jumping on the cloud bandwagon. Instead we didn’t take that approach at all and kept our expenses pretty low. We also built something that most people would think is pretty boring on the surface (inventory management systems) but that actually helped us. We addressed a need that didn’t seem cool and revolutionary which actually meant it had been overlooked and had the most room for improvement.”
Louis went on to add that straying from the herd can be risky, but that failure itself is can be a good companion to keep close.
“Always assume you’re going to fail, because it forces you to find out what you want to do. It keeps me going on some days because you know what the reason is for what you’re doing. You have nothing to lose.”
The Road Ahead:
Even as Archon System has grown, its focus on building a profitable business has been carefully balanced with the desire of its founders to create a positive workplace.
“We’re aiming for something different from the software startup mentality,” Stephen mentioned near the end of our chat. “We want to grow the company as a great place to work, but one that is also sustainable and focused on the long term. A lot of what we do reflects those values. We’re not trying to maximize the revenue today to sell the company tomorrow.”
With an office culture that extolls teamwork and collaboration (while also encouraging staff to spend a few days a week working from home), Archon Systems is a rare combination of an emerging software giant and a close-knit, innovative team.
At the end of the day, it’s especially exciting to see a Toronto-based startup that takes the best of two worlds (Silicon Valley and Canada’s own emerging startup community) and merges them to create something spectacular. Archon Systems has a bright future, but even as its client base has spread to over sixty countries it has remained one thing above anything else: made in Canada.
Stay tuned to the Dx3 Digest for our ongoing “Made in Canada” series: