Sramana: Can you tell me a bit about your decision to raise money?
Mark Organ: Once we knew the formula for a sales unit and the return it would provide, it was time to step on the gas and we needed money to do that. We knew that if we did not do that, then another firm would. There were some legal and tax problems for American VCs to invest in a Canadian company.
We received a cold call from JMI Equity who had a partner whose expertise was marketing software. JMI had to establish a subsidiary in Barbados in order to make the investment. We also had a very problematic angel pressing for preferential status. We ultimately raised $4.7 million on a $14.3 million valuation. We had $5 million trailing revenue, we were profitable, and we were growing over 100% a year.
Sramana: If you were doing that in Silicon Valley, the valuation would have been way higher at that time.
Mark Organ: It would have been far higher. A company today in Silicon Valley with $5 million in revenue, profitable, and growing over 100% a year would be close to a $100 million valuation.
Sramana: That’s exactly right.
Mark Organ: It was still a great deal for us and a great deal for the venture firm. We raised that money in 2005. In 2006, we raised another $12.8 million. At that point, investors owned 50% of the company. In 2007, the VCs had a different idea of how we should run the company and I had to leave the company.
Sramana: Was that a highly contentious decision?
Mark Organ: It was not my idea to leave. It was a challenging time for me. At the time, Eloqua was doing about $20 million in revenue and I was opening offices around the world. That aspect was contentious with my board. I knew that once the investors had more than 50%, I would have to leave the company at some point. I think today the VCs appreciate the value of founders more. There is a level of passion and commitment you don’t get from a hired gun CEO.
I did not expect to leave the company completely without the chance to hire my replacement. Ultimately, it worked out quite well. Eloqua did go public and was acquired by Oracle for $900 million. I am still good friends with my co-founder at Eloqua, and Eloqua is my customer and partner.
Sramana: You have now started another company. What did you do after you left Eloqua and how did this new company come about?
Mark Organ: I had the idea for Influitive while I was at Eloqua. When I was raising my A round, we were talking to Matrix Partners. David is an amazing VC and a great teacher and has put out great material at ForEntrepreneurs.com. In particular, I like the piece “One Day Sales Cycle”. David told me about that story while we were talking to his firm. It is a story about how he sold a years’ worth of software in one day.
That story was so motivational that I decided to take 3 weeks and go out into the field to understand, directly from my customers, how they bought and why they bought. I built a flow chart on all the steps that people had to take to buy my software. I was particularly interested in the company that bought in 4 days instead of 4 months. Why were they able to buy so quickly? In those cases, they had a lot of evangelists or advocates that were heavily involved in the buying process.
I had a black book for startup ideas, and I wrote a new idea in my book. I wanted to create an Eloqua-like thing for advocates. In 2007, I had the opportunity to pursue that idea. I tried to get a team together and I could not get the right people. I decided to postpone building Influitive until I could get the right team. At the same time I got a great opportunity to go to Asia where I really wanted to live.
Between 2007 and 2009, I tried a whole bunch of things. I tried angel investing, I joined some boards, I did a bunch of consulting, and I became CMO of a public company out of California. None of it was all that satisfying for me to be honest. I am a professional entrepreneur and I take it seriously. This is what I will do until the day I retire. I don’t think I will ever be a VC or a CEO coach. It is liberating to have that direction in my life.