On The Way To 100 Million Dollars In SaaS Revenue: Vocus CEO Rick Rudman (Part 4)

SM: I am assuming you raised a second round. When was that?

RR: We then raised a second round of $12 million. That was in the fall of 2000. It was only eight months later. Our valuation increased during that time by five times.

SM: What were your valuations?

RR: The first round was a $6 million pre-money and we raised $2 million, so $8 million post. The second round of funding was at $35 million pre. We learned a lot from the first $2 million. We never burned through the cash we raised in the second round. We turned cash flow positive in 2005. It took us about four years to reach cash flow positive. We had $4 million left in 2005 when we went public.

SM: Who did you raise your second round with?

RR: The second round was led by Lazard Technology Partners with Sterling Venture Partners participating. We took the company from $4 million to $28 million in 2005, and we were cash flow positive at that point. For 2005 overall we lost a couple percent in total because we reached cash flow positive during that year.

We went public in December 2005. We priced at $9 and had an initial market cap of $120 million. Since then we have averaged 35% a year top line growth. Our guidance for 2009 is $84 million in revenue.

SM: Can you talk about the mechanics of growth between 2000 and 2005? How were you selling, and what propelled the growth?

RR: Clearly between 2000 and 2005 we were spending the $12 million we had raised. The big thing that happened was the SaaS model. We did not need the enterprise sales model with lots of field reps. During that time our growth was driven by an inside sales model. That is now pretty common for all on-demand companies.

Overall our strategy was very simple. First, we built out the product suite. In the early days the primary focus was on the media database and the media relations module. From 2000 to 2005 we launched our news monitoring and analysis module. That partly spurred our growth. Second, we built out our inside sales model. It was a very simple strategy.

Even today we see a large, untapped market. When we look out and see people that need some sort of news or PR distribution we think that number is in the hundreds of thousands. Our strategy was much more focused on customer growth.

SM: What does your competitive landscape look like, and how has it changed over time?

RR: Today it remains a fairly fragmented industry. Outside of the PR community, companies that sell into the community are not well-known. There is no other U.S.-based public company that is solely focused on PR. When I go out to investor relations shows, it is very rare that any investors have heard of any competitors in the space.

With that being said, we do have competitors in the space. The list will typically include people like Cision. The people who serve this industry are generally small or not well-known outside of the industry. It is also important to recognize that Vocus has three primary capabilities which integrate. What we find in the competitive landscape is a competitor that does only one aspect. BurrellesLuce is a news monitoring company, but they historically have not done media relations or press releases. The bigger dynamic is that when we go out to sell our products and services, over 50% of the time we do not run into any competitor. It is a fairly open, “green fields” opportunity.

This segment is part 4 in the series : On The Way To 100 Million Dollars In SaaS Revenue: Vocus CEO Rick Rudman
1 2 3 4 5 6 7