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Laying foundations for hyper growth

ALBUQUERQUE, N.M. — Lavu Inc. is battening down the hatches for hyper growth.

The company is already regarded as one of the fastest-paced startups ever to emerge in Albuquerque, having built its homegrown point-of-sale software system for restaurants and hotels into a global brand in just a few short years. It launched in 2010 and, by last year, was already boasting about 4,000 customers in more than 80 countries, with well over $4 million in revenue.

But now, Lavu is preparing for accelerated expansion, thanks in large part to a $15 million investment it won last June from the Washington, D.C.-based venture firm Aldrich Capital Partners. Aldrich – which specializes in helping small, promising startups scale into high-growth firms – is helping Lavu reorganize its corporate structure and broaden its workforce to prepare for turbo growth, said company co-founder and CEO Andy Lim.

“The Lavu engine is already in place, but the investment is like adding on turbo rockets and we need to have a solid foundation in place to handle all that as we take off,” Lim said. “So we’re really ramping up the company’s foundations with new structures and more people before going to the next level.”

The company expanded its workforce by 50 percent last fall, from about 40 to 60 people. It expects to double the head count again this year to about 120.

Lavu plans to double its workforce this year to about 120 people. Shown here are software programmers at Lavu's offices Downtown.

Lavu plans to double its workforce this year to about 120 people. Shown here are software programmers at Lavu’s offices Downtown.

To house incoming staff, the company is acquiring a lot more space at the Theater Block building at Central Avenue and 1st Street SW, a three-story complex where, until now, Lavu occupied about 10,000 square feet on the top floor. It recently expanded into more third-floor offices and is now taking over the entire second floor, giving the company more than 20,000 square feet, Lim said.

Lavu also plans to open satellite offices on the East and West coasts in the next few months.

As it ramps up, Lavu is fortifying its management structure and altering some key business practices, particularly in sales, marketing and customer care.

“We’re looking at the whole company to adopt new strategies with help from our investors,” Lim said. “That includes different strategies in how we sell our products, not just what we sell. A lot of things will change.”

Pumping up sales, marketing

For one thing, Lavu is setting up a large and well-trained sales and marketing team to do a lot more direct sales and contract management with current and potential clients.

Lavu operates out of this modern office space in Downtown Albuquerque. This year's planned hires are 25 new sales staff, five marketers and three customer care representatives, along with nearly 20 more software developers.

Lavu operates out of this modern office space in Downtown Albuquerque. This year’s planned hires are 25 new sales staff, five marketers and three customer care representatives, along with nearly 20 more software developers.

Until now, the company had relied mostly on independent distributors in the U.S. and other countries to sell its products. Nearly 200 resellers were marketing Lavu’s point-of-sale software system as of last year to restaurants and other establishments worldwide.

In its early stages, Lavu gained a lot of traction that way. Its appeal was generally based on the strength of its product, which allows service businesses to conduct most operations on mobile devices, such as tablets and smartphones. With Lavu, restaurants and hotels can integrate all front- and back-end operations into a single platform that processes everything in real time.

Table servers, for example, can take orders directly on iPads or smartphones, allowing cooks to instantly read them on screens in the kitchen. The meals are automatically logged and processed for payment at a tablet-based cash register.

At hotels, guests can make reservations, check in and out, and communicate with room service on mobile devices.

But while the product’s innate appeal opened many customer doors and helped establish Lavu as a rapidly growing brand, the company now needs to build up its own in-house sales and customer-care capabilities, said Ohad Jehassi, Lavu’s new acting chief officer for marketing, sales, customer care and operations.

The Lavu logo. The rapidly growing company plans to open satellite offices on the East and West coasts in the next few months.

The Lavu logo. The rapidly growing company plans to open satellite offices on the East and West coasts in the next few months.

“We’ll continue to work with distributors but, since the investment last year, we’ve built out our own direct sales channel,” Jehassi said. “That’s new for the company. We now expect direct sales to outpace reseller sales.”

Among this year’s planned hires are 25 new sales staff, five marketers and three customer care representatives. The company will also hire nearly 20 more software developers to further broaden its product offerings.

“We’re on a hiring spree to bring in the needed expertise,” Jehassi said. “We’re bringing on more senior leadership and talent.”

Jehassi is a serial entrepreneur whom Lavu’s new investors brought on to help the company transition from a startup into a high-growth firm. And, like most startups, Lavu had until now focused more on product development and deployment than on corporate structure and customer care.

“We’re basically taking a startup and turning it into a scale-up,” Jehassi said. “When we (Aldrich Capital) arrived, Lavu was still very much a startup and, like most companies at that stage, Lavu didn’t focus on building certain business functions in parallel with its product.”

Aldrich is also helping Lavu’s newly organized board of directors to carefully evaluate all strategic decisions going forward based on detailed market research. Aldrich Capital co-founder and general partner Mirza Baig is now board chair.

“With our new investors, we now have really structured board meetings with key performance indexes to measure all data and make forecasts,” Lim said. “Our decisions are now all based on concrete data, not just on a decision to try things out.”

Changing the culture

Such changes can be a bit jarring for startups when skilled venture capitalists come on board. But investors say it’s critical for the company’s ability to grow and mature.

“It does dramatically change the culture of a company,” said Bill Bice, a partner in the Verge Fund and chairman of Albuquerque’s ABQid business accelerator. “It’s not much different than when you’re being acquired, and you bring in a new boss and new layers of management.”

That can be a sharp learning curve, but a worthwhile one, said Cottonwood Technology Fund managing partner David Blivin.

“You’re bringing on people who have done this before and who can anticipate things to make sure the company is truly ready and able to grow rapidly,” Blivin said. “The investors add a lot of value, with resources, managers and know-how to manage the growing pains.”

For Lim, who co-founded Lavu as a two-man startup with local business partner Corey Fiala, it’s been kind of a crash course in management.

“It’s mind blowing how much I’ve learned in the past six months,” Lim said. “Personally, I love the agility of small, nimble teams like we had before, but the new structure is critical to growing the business, and the investors have brought tremendous resources, connections and know-how.”

Lavu is betting on that wealth of experience to help it grow into a major global player in the coming years.

“Lavu is fortunate,” Bice said. “The investors chose it as a centerpiece and foundation for a very big company. As it grows, it can help change the face of Albuquerque’s startup ecosystem.”

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