Steady at the Helm: Cash Management and Cost Control at Jotta AS
Founded in Oslo during the 2008 financial crisis, Jotta's journey is a testament to the power of cash management and stringent cost control. In this exclusive Startup Extreme interview, Roland Rabben, the founder and CEO of the successful Norwegian cloud storage company, offers insights into the disciplined financial strategies that got the company through turbulent economic waters.
Starting up during financial crisis
“We got the idea to Jottacloud back in 2007 and decided to quit our jobs in spring 2008”. This decision coincided alarmingly with the financial markets starting to falter. Rabben recalls the timing very well: "From quitting our jobs in the spring of 2008 to when we started working full time in October 2008, the financial market had collapsed, and we were heading straight into the financial crisis — it was scary timing, but at the same time, it couldn't get much worse."
Despite the daunting economic backdrop, Rabben and his co-founder were prepared to rely on their own savings for the first crucial year. "We were not too worried about the financial crisis at that point. We had a clear plan, we believed in the product, and we had enough cash to survive until the launch," Rabben explains. They raised only 2 MNOK before launch in 2009 to buy servers and secure necessary infrastructure.
Cash focus paying off
Rabben's early focus on cash flow was not just a temporary measure but a foundational business strategy. This philosophy became a cornerstone of their operational strategy, emphasizing cash management as a critical KPI. Rabben stresses the importance of this approach: "The first 10 years, cash was our most important KPI, knowing exactly how much money we had at any given time, down to the krone." The strategy paid off. "I believe we have raised 10 MNOK in total for Jotta AS, this was during the period from late 2009 up until early 2011. From early 2011 we were cash positive. One piece of advice I would give is to have control over the cash. To control your own destiny, you must control the cash flow."
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From cash focus to people focus
Their lean approach did not come without challenges though. Rabben recalls the repercussions of under-resourcing: "We started the company on a shoestring budget and made a product with the absolute minimum amount of people. We underestimated what it took to make a good and stable product. It probably affected the stability of operations, ending up with us having to stay up in the middle of the night to keep the service alive because we didn't have proper staffing, or having to go out to the data center to change disks on holidays and weekends."
The constraints of limited resources sometimes compelled the team to make some quick decisions regarding staffing. During the first years, the urgency to fill positions sometimes led to hiring decisions based on short term capacity rather than long-term fit, just to keep operations running.
"What I have learned is that it is extremely important to have the right people with you. In retrospect, more important than what I initially thought. And it’s not just about capabilities. Starting a company is demanding; you involve family, investors, and partners. Therefore, you need people who contribute with positive energy, who are willing to step up, and who understand that this is not a regular 9-to-5 job. If you realize that someone isn’t the right fit, you should fix it right away. Just rip off the band-aid.”
Under Rabben’s leadership, Jotta AS has grown into a leading cloud storage company, safely storing 135 petabytes of data on their servers located deep inside the Norwegian mountains. In 2023 the company had a revenue of roughly 100 MNOK and an EBITDA margin of 50.8 %.
3 ADVISES TO ENTREPRENEURS:
Rabben offers clear advice to other entrepreneurs:
- "Have a clear idea of what the product should be from day one and try to stick to it."
- "Be willing to adjust the strategy if opportunities arise and be opportunistic. For us, as an example, an opportunity arose to sell through partners under a different brand than Jottacloud. This wasn’t originally planned, and it was a quite different and important strategic decision."
- “Plan for the cash, and do not put yourself in a situation where you're dependent on someone else to fulfill your dreams."