Sramana Mitra: This is a behavior that we see in people who are playing with their own money as opposed to other people’s money. It can be easier to be very cavalier and generous with spending other people’s money. When it comes to your own money, you’re a lot more careful.
John Keagy: Not just more careful, you’re more critical. You don’t keep charging down a path that isn’t obviously successful. You’re not as sloppy.
Sramana Mitra: In this particular scenario that you’re describing, I think you hit upon your customer acquisition model, cost structure, and delivery model very quickly. It sounds like you were generating demands through Google PPC and fulfilling demands through building capacity on the server side. Isn’t that correct?
John Keagy: Yes, that’s true but the point I’m trying to make is that if I had a million dollars in financing, I wouldn’t have been as aggressive in questioning what I was spending money on. There were a lot of twists and turns that I had to adapt to in crafting the offer and in where I spent the money to drive sales. I don’t think you cut bait as quickly.
Sramana Mitra: Can you share experiments that you did that didn’t quite pan out right that you decided to discard?
John Keagy: How much free transfer to give away with the server was something we tinkered with substantially. Back then, Google PPC advertising also had a lot of nuances to it. I really worked extra hard to make sure that the money spent was effective and efficient. Also, I made sure that employees were really working hard at producing for you.
Sramana Mitra: Generally, when you’re working in that bootstrapped mode, you’re a lot more conservative with hiring. I see a lot of Brownian motion especially in venture-funded companies. People hire randomly and spend money on things that don’t really generate anything. That’s acceptable and fine because somebody else is paying the bill. I think when you’re doing it with your own money, you don’t have those luxuries. I see it as a good thing.
John Keagy: I think Brownian motion is a great characterization for what happens in Silicon Valley especially in times like these when investments are running high.
Sramana Mitra: Absolutely. Especially in the social media and cloud area, there’s a lot of free cash floating around.
John Keagy: One reason that I like your mission to get to a million dollars in revenue is that in Silicon Valley, many people confuse success with fund raising. Every night, there’s a party in San Francisco. Somebody just closed their A, B , or C round. They think that’s the definition of success. Success is when you get to a million dollars of revenue.
Sramana Mitra: If you read our literature, we define our philosophy as entrepreneurship equals customers, revenues, and profits. Financing and exit are optional.
John Keagy: Here’s the problem. Are you familiar with a famous basketball player named Charles Barkley?
Sramana Mitra: I’m not a basketball fan, so you have to enlighten me.