After raising more than $7 million from investors, CloudFactory, an American Underground-based software startup, is upgrading its headquarters and more than doubling its workforce in the Bull City.
The company announced on Friday that it is taking over one of the most visible office spaces on West Main Street in downtown Durham — moving into a 3,800-square-foot office previously occupied by the alt-weekly Indy Week.
The office, which is encompassed by street-level windows, is located at the intersection of West Main and Corcoran streets.
The move to 201 W. Main St. will give the startup room to grow, as it plans to more than double its workforce in Durham in the next six to 12 months, from 12 to 26. The Durham office is the U.S. headquarters for the company’s sales and marketing staff.
That growth is being funded by a recent $7.3 million series-B funding round that closed a few weeks ago.
“We are excited to be right in the middle of the action now,” said Mark Sears, the company’s chief executive officer.
CloudFactory is an on-demand workforce platform that helps growing companies connect with overseas-based engineers and data workers to complete digital tasks. The company has around 2,500 workers split between two offices in Kathmandu, Nepal and Nairobi, Kenya.
Sears founded the company in 2008 after a two-week vacation in Nepal with his wife that inspired him.
“On that vacation we met three young computer developers that were super smart,” Sears said. “I was fascinated to hear what kind of technology they used and how much they made. They were extremely smart and talented, but they were only making $60 a month — I couldn’t even compute.
“I said, ‘I would’ve hired you on the spot for a huge amount back in the U.S.’”
He ended up staying in Nepal training those three computer developers and working on projects for companies with them before deciding to start CloudFactory. The company’s first headquarters was located in Nepal.
The company grew rapidly, going from 25 cloud workers in Nepal to 2,500 in its two foreign offices today. About 180 of those foreign-based workers are full-time and the rest are contracted part-time workers, often working remotely for 10 to 20 hours per week.
The company has a goal of connecting a million people to online work, Sears said.
Sears moved to Durham from Nepal about three and half years ago.
Having worked at startups in Canada and California before moving to Nepal, Sears decided to move CloudFactory into the American Underground after a visit to the Triangle to meet one of his original investors, Henry Kaestner, the co-founder of Cary-based Bandwidth.com.
On that visit, Sears met with Adam Klein, the chief strategist for the American Underground — who at the time was with the Greater Durham Chamber of Commerce.
We were going to open our U.S. office in San Francisco and Adam (Klein) asked us why weren’t we opening (in Durham).
CloudFactory CEO Mark Sears
“We have zero ties to Durham,” Sears, a native Canadian, said. “We were going to open our U.S. office in San Francisco, and Adam asked us why weren’t we opening here. He gave this pitch about the growing Triangle, the university talent available and the quality of life — and I was like, ‘That wouldn’t be so crazy.’”
In Durham, the company has followed the trajectory of many companies American Underground-based startups — growing from a two-person, windowless office to the large corner office.
“CloudFactory’s progression through the Durham startup ecosystem is exactly why we created the American Underground,” Klein said in a statement.
A globalizing workforce
The company’s on-demand workforce is popular with technology companies that need to grow their workforces rapidly, Sears said.
Companies such as Cruise, the automated driving unit of General Motors, use the CloudFactory’s platform to tackle time-consuming tasks. In Cruise’s case, CloudFactory employees help the company tag data points from the cameras its self-driving cars use.
Another customer, Ibotta — an app that lets users upload photos of grocery receipts to earn rewards — sends images to CloudFactory, whose workers help correct data errors from the uploading process.
The expanding sales team in Durham will be tasked with finding more customers such as Cruise and Ibotta. So far the company says it has 80 customers.
At a time when many companies face criticism for outsourcing work to foreign workers, Sears said his company hasn’t received negative feedback.
“It’s sort of a politically controversial topic, obviously, but when it comes to businesses and the idea of a flat world and globalization — any of the businesses that we work with are almost all fully distributed,” he said, noting many of them already have workers across the globe.
“A lot of these companies are in a completely different mindset than placing people in one huge building and hiring from within a 30-mile radius.”