Sramana: In 2009, what was your average contract size for an enterprise deal?
Lukas Biewald: In 2009, we were targeting five-digit contracts. In 2010, we realized we could get away with six-digit contracts. Inside sales is one of our major penetration points when it comes to enterprises. We don’t do the inside sales, we just clean the data for them. That accounts for more than 10% of our revenue, but not more than 50%.
Sramana: What was the next phase in the evolution of CrowdFlower?
Lukas Biewald: We have a product people understand and appreciate in Silicon Valley. In 2009 after we raised our angel round we went and got an office. That was exciting. We hired engineers to help scale our project. I hit the road trying to seriously sell to enterprise businesses. By the end of 2009, we had demonstrated that we were able to sell to Fortune 500 companies.
That got us our first VC round from Trinity. Dan was the first institutional investor to look at the company and tell us that it was a true investment opportunity. A lot of our angel investors thought our market cap was small and they felt we had a niche lifestyle business. Bessemer also was in that round. We raised $5 million and brought on a sales team. We also hired a very solid group of VPs. My partner, Chris, and I ran the entire company and had 12 employees. It was a big deal for us to bring on some VPs.
The major issue was that I had a lot of really wonderful people running all this work for our company, and I was essentially required to hire people over them after they had done really wonderful jobs. We hired a VP of sales over some sales guys who were really good. That was very hard. We hired a VP of services over a woman who had done a great job running our services team. It was interesting to watch more senior people come in and work. They had more experience than anyone else in the company. I thought we built a very strong management team that was appropriate for the next phase of the company, and we scaled up to 50 people.
Sramana: How much revenue did you do in 2010?
Lukas Biewald: In 2010 we were in the $1 million to $2 million range, which was up from the $100,000 range. I am not sure exactly where we will end this year, but we will be in the $5 million to $10 million range.
Sramana: What are some of the main lessons learned from your experience building this business?
Lukas Biewald: I am very glad that nobody videotaped my early sales calls. I had no idea what I was doing. I have learned a lot about building a team. As an engineer I was used to making stuff, and there was an arrogance about it being the only truly important function. I realized that when you build a company, you learn how much you need the rest of the team. You won’t hire a VP of finance until you absolutely need to, but once you do you are suddenly grateful to have one. You really learn why you need managers when you have a very flat organization that has trouble scaling.
I also learned how to present to people and be convincing. That was my main job when I ran the company and it is still a big part of what I do. I had to get people excited about the company. That does not come naturally to engineers. I think that is particularly hard when you are building a new industry.