Sramana Mitra: Talk to us about the hiring of this CEO. What was the process that you followed and how did you decide who was the right CEO for you? This is a very difficult and challenging exercise to bring in an outsider to replace the founders.
Heidi Jannenga: I want to be very clear that it was not to replace. We made that very clear through our hiring process that this was not a replacement. This was an addition to our team. One of the emotionally-intelligent decisions that we made was understanding what our strengths were and what we were missing. Through the hiring process, we didn’t want to replicate either one of us.
We wanted to adjunct to our strength with the piece that we felt was missing. That missing piece was a process-oriented, metrics-driven kind of person which neither of the co-founders were. There were other things that we could focus on that we were much better at. As we went through that process, it was someone who was willing to be part of a triad and that there should not be any ego involved. They needed to really fit into our culture of understanding this flat organization and that we are a people-first, purpose-driven organization.
Even to this day, we hire for culture first. Skill set needs to be there. I can pull in 10 resumes that have skills and only one or two of them are going to meet me on a cultural fit. We’ve done that from the get-go. We ran that same process with choosing our CEO. He came to know us through one of the angel groups. He was the Managing Director of one of the angel groups. He was never a CEO previously but had been a COO. He had worked for multiple startups over the years and had been through the grind. I think we all understood that if we got to $20 million, we would probably need to find someone else who would take us to that next level.
It is important to understand what your strengths are and to know how you fit in. As a 300-employee company pushing to $50 million next year, it is a much different stage of the company. What’s held true through all of it is our culture. I can’t emphasize that enough as a startup.
Sramana Mitra: You said you have sold a piece of the company to private equity. Tell me more about what is the history of the company. Other than that $1 million angel round, have you taken any other money before bringing in private equity?
Heidi Jannenga: No. Our metrics are off the charts in terms of SaaS companies. All of the different metrics that we look at are just off the charts. We built a very good machine with a good continued growth path. From the beginning and to this day, we’re not moving towards an exit strategy. We have always talked about building a great company.
A great company means a scalable company, a company that is a great place to work and develop innovative products. When you build towards that, people will take interest and the revenue will come. We have always taken that stance. When we took in that million dollars in 2010, we put our noses to the grindstone. After a few years, private equity started sniffing around and noticed our gain in market share. We had a lot of interest from private equity. We would get emails every day. As founders, we gave a very small piece of the company because we were profitable and had a great run rate at the angel round. We were still holding on to more than 80% of the company at that point.
When you are growing that fast and you have a lot of potential and when you have all of your net worth sitting in one basket, sometimes you can be a little risk-averse with the decisions you’re willing to make with your company. If you make a mistake, you are the one that bears all the brunt. In 2013, we decided to test the market. We did not need money, which is also very key. Back in 2010 and in 2013, we absolutely didn’t need money at all. We were doing great with the revenue that we were generating.
We decided to test the market. We went out and used an investment banker to help us with the process. We needed to run the business at the same time as trying to go out and see what we could get as valuation and potential investment in the company. We got a great response. From the beginning, we told ourselves that we wanted to find a partner – someone who believes in our vision, someone who believes in our culture and what we were doing. I will be honest. We got starry-eyed with valuation.