Sramana: What was your pricing model prior to the shift into SaaS? How did you adjust that model when you moved into SaaS?
Derek Roos: Prior to our SaaS model, we sold perpetual licenses for the use of our platform. The price would depend on the number of applications that would be deployed on the Mendix platform and the number of users those applications had. That model has not really changed. The only difference is that instead of selling a license up front along with an associated annual maintenance contract we now charge annual subscription fees.
Sramana: What was your price comparison before and after?
Derek Roos: The SaaS price is roughly a third of the three-year perpetual software license model price, which means license plus maintenance.
Sramana: Tell us more about what happens when you started entering the U.S. market?
Derek Roos: We saw the importance of finding a few customers that were willing to tell their story to the market. We set up a small office close to MIT, and our goal was to find a couple of customers. We started by leveraging our European success stories. One of the key areas we had good success in Europe was in the insurance industry. We figured that starting in the U.S. insurance industry in the U.S. would be a good idea. The capital of insurance in the U.S. is in Hartford, so that was convenient for us as well.
We started approaching insurance companies with our success stories in Europe, and that landed us our first win. That win became a great reference for us as well. Even today we are still focused on selling our product into specific verticals. We sell into financial services, life sciences, telecom, manufacturing, and retail. The Mendix platform is horizontal, so there is no technical reason why we only focus on specific verticals. I am a strong believer in focus, and that is why we do it.
Sramana: In the technology business, that is a solid strategy. You need to go to market vertically even if you have a horizontal platform.
Derek Roos: We had two interns from MIT who were working with us to develop these product marketing combinations. They were working with us to test the market verticals.
Sramana: What prompted you to move to the East Coast instead of Silicon Valley?
Derek Roos: There are two reasons. The biggest reason is that we wanted to be close to a lot of talent. Boston has dozens of universities.
Sramana: Silicon Valley has the most concentrated talent pool for the tech industry anywhere.
Derek Roos: That is true. My second reason is proximity to Europe.