Sramana Mitra: So you have multiple technology stacks available as a service from your company for people looking for hosted Big Data platforms and you work with these platform vendors to offer them as a service.
John Keagy: Yes.
Sramana Mitra: Is there anything else that you want to touch on?
John Keagy: No, I think we are like minded about having entrepreneurs use a cash flow model as their first step and to try to build a sensible business where they’re constantly testing their assumptions in that cash flow model. That’s the best way to get a million people to a million dollars in revenue in my mind.
Sramana Mitra: If you try to play the speculative game, the mortality rate is going to be so high. It’s not even worth doing.
John Keagy: For those entrepreneurs who cannot picture a world where they’re not raising institutional venture capital, I don’t think that’s true. You can always have more of a services model. I have a Capex-intensive, exclusively recurring revenue, IP-leveraged model. I’m living proof that you can do that without institutional capital. Even in the current climate where you’ll be competing against very well-funded competitors, you can always use consulting services and other non-recurring, less capital-intensive services to help provide a cash flow platform from which to build your product and to slowly grow recurring revenues.
At GoGrid, we’ve spent millions of dollars on patents. We’ve spent $25 million building software specifically on coding. The final thing is that you have to conceive of a new category. The way to get a lift of an entrepreneur is to catch a wave early and get a lift as that category develops. The category that GoGrid is pioneering here is open data services.
Sramana Mitra: Let me summarize a few points that you made here and underscore them. Number one is, we emphasize very much on the services model as a leverage point. We published a book called Bootstrapping Using Services, which basically underscores that whole philosophy of using services to bridge the cash flow barrier. We are on the same page on that.
The one departure point I would say is that we don’t necessarily require that entrepreneurs do not raise money. We are fine with companies raising money as well. It’s more of that we are against the speculative stuff of not focusing on revenue, business model, and monetization. That’s something we don’t believe in at all. If you get to a point where it makes sense to raise money to scale faster, we don’t really have anything against that. We have companies in the portfolio that are raising money. The more fundamentally solid you are, the easier it is to raise money.
It was very nice talking to you John. Congratulations on your success so far!