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Bootstrapping Using Services: InRule COO Rik Chomko (Part 6)

Posted on Monday, Oct 6th 2014

Sramana: In that timeframe, what kind of numbers were you doing? Were you still operating organically? That’s one million in financing and then you’re operating organically, what are the metrics of the business at this point?

Rik Chomko: Back in 2005, we were operating organically. But 2005 and 2006 was quite a big jump for us. We increased our revenues by almost four times. Now, we’re starting to track into millions in revenue and it was a good launching point for us. Then we continued that growth, so we had about 287% growth in 2006, 79% growth in 2007, and then in 2008 were hit by the great recession. It’s kind of a disappointment. We felt like we’re on this great trajectory and things were going great when the recession hit and we were required to batten down the hatches. Sramana: Right. Especially that the way you were getting traction really got hammered in the recession?

Rik Chomko: Yes, it did. It got hammered heavily. That was one of the big disappointments for us, but one of the important lessons we’ve learned at the services company was that you have to make sure that you take care of the company and pay attention to where you’re spending your money. We knew the recession was going to hit people really hard, so we took steps to make sure we weren’t spending money that we didn’t need to.

Sramana: What were you doing in the heavy recession years of 2007, 2008, and 2009? What was the revenue level, how were you managing, and what moves did you make at that point?

Rik Chomko: So the great part about the downturn was this one silver lining. Earlier, we were getting a lot of calls for mortgage brokerage, but during the recession, we were getting a lot of calls from bankruptcy services.

Sramana: Interesting.

Rik Chomko: So it’s kind of an interesting switch. We started getting all these calls from the bankruptcy servicing companies. They wanted software that’s going to help them make decisions faster and easier and that’s really what we allowed them to do. So though revenue took a hit that year, they still by 4% in 2009. In 2010, we managed a 1% growth but were starting to feel the effects of the recession. However, we continued to focus on growing the company slowly but responsibly. We grew our international business a little bit both in the Europe region and over in Australia. So around that time, we signed on a reseller knowing that we didn’t want to spend the money on that region to start up another office or even hire someone. It was a better deal for us to find a reseller that liked the product and could sell it to their customers.

Sramana: In Australia?

Rik Chomko: Yes and New Zealand.

Sramana: And how did the Australian business fan out then?

Rik Chomko: It’s still going strong. They’re helping us increase our software product sales and therefore our revenues every year and we continue to consider them a really good partner. It makes a lot of sense. It’s very expensive to start up an office and hire people and manage all that from another part of the world. So the reseller model works great for us in that region.

Sramana: How big is your Australian business?

Rik Chomko: I’d say we’re tracking to do about $1 million to $1.5 million this year.

Sramana: Okay. Other than that is there any other geography where that reseller strategy has worked for you?

Rik Chomko: We tried it in Europe, but for some reason, it didn’t work out that well. I don’t know if it was because of the fact that the opportunities were coming from the UK and then the reseller would be in the Netherlands or vice-versa. It just never seemed to work out, so we felt more comfortable selling directly and in fact it was only an eight-hour flight. It’s also more comfortable hiring an individual or couple of individuals to help us run our practice over there. The problem now was a bigger market.

This segment is part 6 in the series : Bootstrapping Using Services: InRule COO Rik Chomko
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