Thought Leaders in Mobile and Social: Not Just Wine in Bordeaux – Interview with Benjamin Mestrallet, Founder and CEO of eXo (Part 6)

Sramana Mitra: The reason I am asking you these questions is that I imagine there are a lot of people sitting in our shoes who want to have their own social networks.

Benjamin Mestrallet: That is what is interesting about the market. If you look at the social market, it looks like a consolidated market with one mind share leader, which is Jive. But the leader is in fact IBM. When you look at the limited number of people who pay for it, they are mostly large companies. History proved that open source strategies and products tend to increase the size of the market by allowing smaller companies to enter the game and to use these technologies. People say it destroys the value, but I don’t think so. It is probably going to increase the size of the market. Maybe the pricing will be less, but there will be more choice for customers, and with less money they can get more features. If we are successful and we communicate well with our product, that is what can happen in that type of market.

SM: And you have about $5 million in revenue?

BM: A bit more.

SM: What are the levers you are going to push to grow?

BM: What we are proving right now with our model is that it scales and it is a repeatable sales pattern. We are very close to launching it, and at the same time we are cash flow positive. The next step will be to grow. Then we will probably raise more money toward the middle of next year to expand and have more investments on the development side, which means communications, marketing, and sales.

SM: In terms of U.S. customers, what are you seeing?

BM: As we are managing a lot of inbound leads at the moment, because of the open source strategy, we got 35 people from our leads that come from the U.S. If you compare that to the beginning of the year, it is a huge increase. The U.S. has become the number one country in terms of leads. Now we still have to convert that into our main revenue, but it is just a question of time. Historically our sales cycle was nine months, which was a long sales cycle. Now it is going toward three to four months. In three or four months you know if you win or lose, but at least you know. This is much easier to predict, and it is what we wanted.

SM: What has been challenging about building this company so far?

BM: We wanted to do something that we liked and that can sale with minimum capital. Building something like that is extremely challenging, especially when you have competition that has millions of dollars. But that comes from our roots, where we bootstrapped the business for seven years. Even though we raised some money, we are not diluted at all. All the initial shoulders have a lot of equity in the company. That gives us some freedom to go the way we want to go.

SM: Don’t change that position. The more money you raise, the more the bar gets raised in terms of liquidity.

BM: That is true, but it also depends on the market. What is important is to not raise too much until you are sure you find a product fit where you can scale. You can even use equity funds.

SM: In SaaS you can also do receivables financing. This means the bank will finance all of your receivables and give you lots of cash.

BM: It really depends on the market. If people can bootstrap their company, I advise them to do so. In many cases it is complicated, though.

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