Sramana: Did you start the company with a pure cloud SaaS vision?
Dean Stoecker: We had the engines that were running the cloud services developed as desktop tools. We had the vision of having strategic and tactical tools and that the tools would be data independent. We expected to be able to ingest big data and little data. We noted in our business plan that the tools would have to be geography independent. We made it so that it was both desktop and cloud-based, because we knew that some companies would not use a cloud environment. From the very beginning, we architected the solution with a very broad dimension. We wanted to make sure we would never box ourselves in and limit our growth.
Sramana: This is interesting because as the company matures, you need to be able to provide support for every solution that you market.
Dean Stoecker: It’s interesting because over the years we expanded. Initially, we were specific to certain industries. As our tools and platform began to expand, it became harder and harder to pick domains that we would call our own. Our tools went from being an inch wide and a mile deep to being a mile wide and an inch deep.
Sramana: How long did you stick with the inch-wide, mile-deep strategy?
Dean Stoecker: When we got to around $10 million in revenue, it became more important to have domain expertise. When we got to around $20 million, we found the need to become specific and focused on certain verticals.
Today, those verticals are retail and telecommunications. We are seeing our selling price increase and the value of our solutions are much easier to recognize. The stickiness in those accounts is broader and the upselling rate is higher.
Sramana: You said $10 million was a strategic inflection point. How long did it take you to get to $10 million?
Dean Stoecker: It took us about five years to reach that point.
Sramana: At $10 million, you went very broad, and at $20 million, you came back to vertical focuses. How long did it take you to reach $20 million?
Dean Stoecker: It took us an additional seven years. We made the first change around 2002 and the second change around 2009. Simultaneous with those changes were the requirements in infrastructure to support growth. In order to grow, you need to have ERP, CRM, and HR systems. You need things to help manage your growth.
Sramana: Did you have strategic product challenges during that time?
Dean Stoecker: What is interesting about starting as a professional services firm is the migration to becoming a pure software play. We built one engine at a time, and each engine did something different for each customer. In that process we were listening to the market and tried to understand what the next infection point was going to be. You have to be careful as an entrepreneur; you need to listen to customers, but that does not mean you need to build exactly what they ask you to build.
We generally sell to line of business with a small amount of sales to IT. In 2005, we heard that organizations needed more capabilities and fewer tools. Instead of building more tools that all did very interesting things, we focused on the integration of the tools into a single workflow product. They wanted more capability with fewer tools. They needed to manage all of the technologies with a lower head count.