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Bootstrapping to $45 Million from Chicago: RKON CEO Jeff Mullarkey (Part 2)

Posted on Sunday, Jul 19th 2015

Sramana Mitra: Let’s talk about that in more of a granular, step-by-step, chronological order. Who was the first customer in 1998? How did you get that customer and what did you offer?

Jeff Mullarkey: We decided to focus on the legal community. This is not our business model today. RKON stands for remote connectivity. We were helping them replace their old dial-up remote access systems, which was frankly going to cut their bill down from $100,000 to $5,000. The ROI was just tremendous. To be honest with you, I got on the phone and cold-called a bunch of law firms and said, “I know you have huge bills on remote access. I have a way to cut that down to 20%.” Our first customers were large legal firms.

Sramana Mitra: How many of these customers did you get in 1998 and how much did you charge them?

Jeff Mullarkey: We got probably 20 or 30. We probably averaged $10,000 in services per client. It turns out that we were bringing a lot of value to the table but there was not a lot of money involved.

Sramana Mitra: But you made a couple of hundred thousand dollars that year in terms of revenues?

Jeff Mullarkey: Yes, I think our first year was around $250,000 to $300,000.

Sramana Mitra: What happened in 1999?

Jeff Mullarkey: We started expanding outside of the legal vertical. To begin remote access, you need some core disciplines. One is security and the other one was application delivery infrastructure. We ended up specializing on those things. Security, as you know, started to take off because of the Internet in a big way in 1999 to 2000. We started expanding our scope to just being a broad security infrastructure provider. We started partnering up. Our account grew quite a bit. It was just consulting services at that time. We grew to about five people or so over the next few years just doing small consulting. We were known as security consulting company at that moment in time.

Then in 2001, the economy collapsed. Then, 9/11 happened. The economy was in throes for some time. We saw a major impact on our revenues. In fact, our business partners that we represented would call us up just to see if we’re still in business because there were so many people out there who were going out of business. 20 or 30 companies in Chicago went out of business. That was the start of the giant stock crash and everybody just seized up. We had some close calls as well.

We stepped back and, frankly, we just waited out the competition. We realized that if we’re the last man standing, we have a chance to grab a lot of their market share. Number two, we took anything we could get at that point. We changed the focus of the business. All these things happened at the same time. What we noticed was we were implementing solutions that our customers were managing poorly. We put something in that would solve a major problem. A year later, they’re looking to yank it out because they blame the technology. We realized that we’re essentially handing a nuclear power plant to cavemen.

We offered to start managing these infrastructures. It was just the right magical moment in time. It gave us recurring revenue. When the company dropped, that’s what killed all of our competition. We had done this just in time to get some recurring revenue. That was the start of the business that we have today.

This segment is part 2 in the series : Bootstrapping to $45 Million from Chicago: RKON CEO Jeff Mullarkey
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