Sramana: What kind of penetration do you think you have into your TAM, specifically to sales forces?
Chris Cabrera: I think it is still a pretty nascent market and the number is still low.
Sramana: Is the TAM basically your revenue and Callidus’ revenue?
Chris Cabrera: Oracle has some products in this area, and they do not report exactly how much they do in variable comp. I have heard they do as much as $300 million a year. IBM does not report their numbers, either. Callidus is a public company, and they are still at a $100 million run rate.
Sramana: Is the TAM around $500 million to $600 million?
Chris Cabrera: That is the amount of revenue in the category right now. I still think the market is untapped. There are roughly 10 million sales people in the United States. If you are getting $40 for each of them, then that is a $4 billion TAM just in the U.S. There is just as big of a market in Europe, Africa and the Middle East.
Sramana: How many sales people do you touch today?
Chris Cabrera: Probably on the order of 120,000 sales people.
Sramana: There are still a large number of untapped sales people.
Chris Cabrera: Absolutely. This is a huge opportunity.
Sramana: There are probably 600,000 sales people being touched, and there are 10 million sales people in the US. The market is definitely untapped.
Chris Cabrera: Absolutely, and that is just the TAM for our sales product. We still have data, insights, and analytics as well as the non-sales people. This is a large market.
Sramana: I wonder why nobody else has gotten into this market. Every time I see a trend validated by someone, I see a ton of competitors crop up in the market.
Chris Cabrera: This is an extremely difficult problem to solve. We raised $72 million which is a lot of money, especially for a SaaS company. Almost $40 million of that went into R&D. This product is not for the faint of heart. Creating a multi-tenant product that can cross over all of these industries is substantial. We are calculating on over a half a billion transactions every month. It is a very intensive product. When young CEOs start to look at this space, they probably think twice once they do their research. It would take years and years for someone to catch up to us. The big guys, Salesforce, SAP, Microsoft and Oracle, have all decided to go to market with us.
Sramana: It sounds like you should be on the acquisition radar of SAP, Salesforce and others.
Chris Cabrera: The IPO market is very attractive, especially when you see the multiples out there. I am focused on building a big company meant to last for a long time. We actually acquired the only other multi-tenant competitor in our space back in 2009.
Sramana: Why did you make that acquisition?
Chris Cabrera: It was a combination of things. We were beating our heads against each other, and we ultimately decided to join forces. The one plus one equals three model works sometimes.
Sramana: How big were they?
Chris Cabrera: They were about half of our size. It was not a merger of equals. We did a stock acquisition.
Sramana: Are the founders of that company still with you?
Chris Cabrera: They still own stock and are still great believers and followers. The daily operation is predominately the Xactly team that was in place. We still have a lot of their employees. Our top rep for the last number of years came from that acquisition.
Sramana: Did you keep the customers and move them over to the Xactly platform?
Chris Cabrera: Yes, that is exactly what we did.
Sramana: This is great. It sounds like you are building a great company that is in the enviable position of not having competition. It has been very nice talking to you, thank you for taking the time.