Sramana: It is good that you have identified a process for moving into new business areas, particularly since you are a SaaS-based business.
Roman Stanek: SaaS is an unforgiving business. It is a resource-intensive business, and customers can always churn. There is loyalty, but it is only gained by quality service. There is a very low exit barrier. We have to be extremely careful in our focus when it comes to product marketing and product management. We absolutely must know which products we should spend time building. That is why we always look at the maturity of the business cases and the maturity of the markets.
Sramana: What kind of competitive landscape are you operating in? Big data is a massively crowded market. Whom do you see in deals?
Roman Stanek: If you look at it, there are multiple ways you can slice our market. You can have an on-premise solution. I am surprised because many companies I thought were hosted are actually selling software. We do not compete against people who sell software. They have to go after IT. I sell to business people. In that sense we do not compete against 80% of the big data names.
We have two types of competitors. There are companies which offer hosted data solutions as we do, and then we face out biggest competitor, which is Excel. Companies use Excel, email Excel, and have a lot of analysts. That is the biggest competitor for any big data company in the world, and we see that as our biggest competition as well.
Sramana: How do you price your solution?
Roman Stanek: We price based on data volume. We have a small component for number of users, but the most sensitive part is data volume.
Sramana: What is your average deal size?
Roman Stanek: It is difficult to give you a number because we have two primary channels. We sell directly to end users, and we also license our software. When we sell directly to end users, our average deal size is around $75,000 a year. When we OEM the platform, it is closer to $100,000 or $150,000 a year.
Sramana: What percentage of the business comes from OEM channels?
Roman Stanek: It is about 50% of our business. OEM is good because any company running a business process in the cloud will want to OEM us to obtain analytics.
Sramana: What strategy have you used to finance the company?
Roman Stanek: It is very straightforward VC financing with A, B, and C rounds. One of the downsides of a SaaS business is that it is extremely cash heavy. We have to sell and market the company before making money later on. So far we have raised $55 million, and we will have to raise some more.
I put in a couple of million dollars to get things started as an angel round. I then did Series A with General Catalyst for 10 million dollars in 2010. We did our Series B with Andreessen Horowitz in 2011. Series C was in 2012 with Tanaya Capital.