Thought Leaders in Mobile and Social: Not Just Wine in Bordeaux – Interview with Benjamin Mestrallet, Founder and CEO of eXo (Part 2)

Sramana Mitra: And the two other people working with you on this project were also from this school in Bordeaux?

Benjamin Mestrallet: No. One was from Canada and the other one from Ukraine. We met online and started working together. When the U.S. Department of Defense came and asked us to do some consulting services first, we had to create a company. So we created the company, but we had never met before. The company was headquartered in France, while our only customer was a U.S. customer. At that point we were doing consulting services for them for about one year. This was 2003.

In 2004 and 2005, they purchased support and we got a couple of hundred thousand dollars, and we decided to reinvest that. Then we decided to add more features to the platform. We added web content, collaboration, etc. and added more customers, mainly focusing on European customers. At that time we were focusing more on the product and not too much on sales, so we partnered with a direct sales company and asked them to sell for us. At that time we had the U.S. military reference, so they suggested that we try with the French military as well, which we did after some time. It was much more complicated to get the French military though. The funny part is that the project itself was for collaboration between military forces in Virginia and the Iraqi ones. We couldn’t use that to promote in France, because there were some conflicts at the time.

SM: In the commercial open source business model, you typically put something out on the open source domain, and people come to you for support and consulting. In this case, when you brought in system integrators, how did you make money?

BM: They were taking our product, built an application on top of that for customer solutions and sold that package, including the support. They were doing the support for their stuff and taking the support for our stuff. That was the entire package. At the end of 2008 and beginning of 2009 we started to make an OEM, and we decided to move to the U.S.

SM: How much were they paying you?

BM: It was a royalties-based contract, so it was a percentage of what they sold.

SM: What is the business model?

BM: It is subscription based. They do a lot of prepaid – a lot of cash upfront – and when they get the money, we get a percentage of that.

SM: What year did you do the Red Hat deal?

BM: It was in 2009. They started to sell in 2010.

SM: What kind of revenue ramp did you have between 2003 and 2009?

BM: The issues we had with the revenue in the beginning was that we were very focused on service. When you are focused on the service you can’t really scare. To still grow while we were bootstrapped, we had a very interesting way to build software. We opened an office in France, Ukraine and also in Vietnam. We grew our service there. In 2005 the revenue was a couple of hundred thousand dollars from the U.S. government, and we doubled that every year since then. At that time we moved to Paris.

SM: Did you have a team in Paris?

BM: No, we were depending mostly on the Ukraine and Vietnam.

This segment is part 2 in the series : Thought Leaders in Mobile and Social: Not Just Wine in Bordeaux - Interview with Benjamin Mestrallet, Founder and CEO of eXo
1 2 3 4 5 6 7