After his first company failed, Brian Maguire swore off service businesses; they’re too easily replicable, he thought. Then inspiration struck, and though he tried to fight it, it’s a service business--and it’s a hit. His company, Net2Vault, a cloud-based data hosting and storage provider, landed at No. 225 on the 2015 Inc. 5000 list. The company’s revenue grew 1,965 percent in the last three years, reaching $2.7 million in 2014. Here, he told Inc. about the surprising value of being based in Silicon Valley and why you can't say ‘no’ to a good idea.
-As told to Noah Davis
Early in my career, I worked tech support for Silicon Graphics International. Marc Andreessen, then a student at the University of Illinois, would call in, asking questions while writing the code for what would become Netscape. That was really inspiring. Being in Silicon Valley as opposed to other places in the country, you get to see success and know people who have done it. That was helpful to me to say, "I can really do this."
Toward the end of 1999, I started a company called Video Encoding. It ended up failing when the dot-com bubble burst. After that experience, I swore I'd never do another service company; they can get commoditized very easily by software. The value in a service company is usually brainpower and being really smart and/or good at what you're doing. That can be written into software. You get put out of business pretty quickly if you don't get it right. It's very risky in that regard.
I took an engineering job at the world's largest service provider. The whole time, though, I was searching for an idea for a product-based company, something that was nice and tangible. I thought it would be easier to start a company and produce something.
I was inspired to re-enter the service world after hearing multiple people say someone should start a company that combined NetApp disaster recovery and NetApp cloud backup. I had to admit it was a great idea, even if it was a service business. I just thought, "shit, why don't I do that?" I think part of it was my Silicon Valley experiences I had had up to that point. People can do it; so could I.
I quit my really nice paying engineering job at the height of the recession. It was literally the worst possible time to do it. It sucked in a certain sense. I went home at night and thought, "what on God's green earth did I do?" I had a wife, two kids, and two mortgages. Actually I had three mortgages. It was just crazy. But I believed in it, my wife believed in it, and I went for it. It worked.
What do I have now? I have a service company. When you come up with a good idea, you come up with a good idea.