SM: You may have to do some of that equity/liquidity swapping due to the structure of venture funds.
JH: One of our funding sources may have to close out their fund, and in that case we will go find someone to help do that. In fact we just recently had a conversation about this amongst the team, and it feels like that is a reasonable thing to do. None of us are in a big hurry to cash out. If VCs need to close out a fund, we can introduce a new later stage investor, and offer them liquidity.
SM: I think going public is just asking for trouble and headaches right now.
JH: It is hard, not to mention all of the reporting duties. You are signing your life away.
SM: Any thoughts about the various nuances of software as a service? In recent years it has gone a bit berserk, but mostly in a good way.
JH: It is like every other trend I have seen, where everyone jumps on the bandwagon.
SM: Some unique businesses are being built though.
JH: Very true. On the other hand, everybody and their brother wants to call what they are doing SaaS. What is unique about our space and what we are doing for very small businesses is that we are, I believe, the leader in having the most customers for a SaaS product.
SM: What is synergistic to you? Is there something you might like to acquire?
JH: We talked earlier about the fact that most payroll companies think about how to leverage the customer base they have for other Benefits or HR applications. I imagine we will think about those types of things. My thought, when I got here, was that we were too small to focus on acquisitions.
We are now getting to the scale where we can start thinking about additional products and services. I mentioned this 1099 service, which is a good example of something where we have already achieved several thousand customers who have signed on for an add-on service. That is important. The focus for the next three years is still on scaling this up to a couple of hundred thousand customers. It is when you think of years 3-6, that you have to demonstrate add-on products and services, especially if you are positioning for financing or an IPO down the road.
SM: This has been a neat story, thanks for your time.
JH: My pleasure.