Sramana: What was your observation of the market in 2005 that prompted you to found Xactly?
Chris Cabrera: At Callidus we were very focused on the high end of the market. Our systems were very expensive. We had traditional enterprise software, and companies paid a lot of money to get installed. These deals could be $5 million or more. We were struggling to find enough companies willing to pay millions of dollars for the technology, which is a bad thing for a public company.
In the midst of that problem, I had the epiphany that the future was SaaS. It occurred to me that we needed to create a SaaS model. Without going into dirty laundry, I was unsuccessful in my attempts to get Callidus to see that multi-tenant cloud environments would mater. I told them that if they did not believe in it, I would go do it, and they said that I should. Originally we were targeting the market beneath the giant companies. Today that has changed and we now compete head to head.
Sramana: Did you have customers who had bought into your vision of cloud-based compensation management software?
Chris Cabrera: No. I had a friend and mentor at Salesforce.com who I had known from my SGI days. He encouraged me to go do this. He was convinced that the world needed a SaaS version of compensation. That is what triggered me to sell the idea to Callidus. Once I decided to go do it on my own, the first call I made was to my mentor, and Salesforce ended up becoming out fifth customer.
We started the company in March of 2005. I went out and got about five customers signed up, loosely, to use our solution. They did not have a contract and had not paid anything, but they told us we could use their logo and that if we delivered the working product that they would buy it. It was a very loose agreement. It was enough to put on a slide to go look for VC money.
Sramana: Who were your five customers? What was characteristic about them that made them early adopters?
Chris Cabrera: They ranged. I got out there and started talking about it. The good thing about our space is that anyone with a sales force has that pain. Anybody who does that in a manual way is not happy. It was not hard to find companies that had the pain. It was then just a matter of finding the right person in the company that had the power and was willing to take a risk. They did not have to take much of a risk because they were not writing a check. All they had to do was commit to purchasing if we delivered.
Sramana: Companies are not that cavalier about letting others use their logo.
Chris Cabrera: They were not taking us lightly, but I don’t want to give the impression that they handed us checks. They were almost like development partners. We took their requirements into consideration.