SM: How did you go from 2001 with $1M in financing to the scale you are today? Didn’t you have to finance the company further? LD: I basically did not have a life for six years.
SM: Didn’t you need more financial resources? LD: When you are cash flow positive, you don’t need any more money. That’s the funny thing. For the first three years, we did not spend any more money. I got a new investor in from Texas Pacific Group in 2003, and I still remember him in every board meeting saying “I can’t believe it, you still have not spent any of my money.”
SM: Who was that? LD: That was Dave Wharton.
SM: I thought so. LD: You know him?
SM: Yes. LD: Do you like him?
SM: Yes, he is a good guy. LD: I think he is a great guy. I am an investor in his new fund. He had me at hello because I had decided I was not going to take any more money from anybody, but he changed me because he came in and said “Wow, this is emotional intelligence on steroids over the web.” I said” Now you are flirting with me, this is not fair!” We spent six hours in a conference room discussing, and I finally said “OK, you can invest” because I thought he was the real deal.
SM: How much money did you take from Dave? LD: I think it was $2 or $5.
SM: All in all, in the history of the company, what kind of investment have you required? LD: I did get comfortable raising money, unfortunately. I raised another $45M. I got Eric Dunn in at that time. What we decided what to do with Dave is that we would go for the big bucks and we would go all out. We began investing in the mid-market. In 2003 and 2004, that seemed like a very ambitious project as it was essentially trying to do two things. Something I had learned at Unilever is if you give somebody a real responsibility, give them a budget, then you can make things like that happen. We separated out and built a business there and it did well. Since it did well I was comfortable going to Europe, but I did not want to destroy the focus of the company so I did it on my own and let the team do what it was doing. I went to Europe every week on my own on a plane, and I did not even tell my board because they said Europe was too complicated. Then I closed a $2.5M deal, in December 2005 with Lloyds Bank in London, and the Board changed their tune.
Then we decided to invest more boldly and took in Eric Dunn and took $5M from him. We saw that this stuff was working, and we had enterprise and mid market, we were doing Europe so should we try Asia and should we try channels? We decided to do it, and we did that with Eric Dunn’s money, and it worked as well. We then saw this business was really working, should we try to go into small business, which is the biggest market in the world. Eric Dunn knows the small market and he felt we could do it. Small business does not have the luxury of having a huge staff to help them, so the product ideas are so crisp, clean and lovely that it was worth doing just for that.