Sramana Mitra: On this topic, I’d like to probe a little bit more. Let me give you some context. We have a very significant research and curriculum material on a methodology that you followed, which we call Bootstrapping Using Services. One of our Entrepreneur Journeys Series books actually covers this as well. Let’s double-click on this a bit. When you started doing Fortune 500 services work around security, tell us a bit more about what specifically did you do?
Kurt Long: It was actually an early version of web single sign-on for large corporations. Whether it’s an insurance company or a telecommunications company, they might have a collection of applications that they use to service their external customers. They don’t want those customers to have to sign in multiple times. They want the experience to be seamless through a portal. They want it to be seamless in terms of security model.
It was really delivering a portal together with authentication and authorization to give seamless and transparent access to all the different applications and resources that a Global 2000 or Fortune 500 company would want to service their external customers. That was the early days of what became a multi-billion dollar industry, which today is called identity management. When we first started in that market, it was probably a $5 million or $10 million market.
Sramana Mitra: Who was the first customer that brought you in to do this kind of work.
Kurt Long: GTE, which is today’s Verizon.
Sramana Mitra: Was it a big client? What kind of deal sizes were you able to get in this services mode?
Kurt Long: I don’t remember exactly. I’m a little hesitant to state a figure.
Sramana Mitra: I’m just asking for a ball park. What we see very often is several hundred thousand dollars kinds of deal sizes, which act pretty much as seed capital for the entrepreneurs to build the product.
Kurt Long: I think that’s a fair characterization.
Sramana Mitra: So it’s basically that strategy. In the process of working with these customers, you came up with a product idea?
Kurt Long: Yes.
Sramana Mitra: What was that?
Kurt Long: Web single sign-on.
Sramana Mitra: Then you started selling that directly or did you go through channels?
Kurt Long: We started selling it directly.
Sramana Mitra: How did that get priced?
Kurt Long: Probably by the number of users that would access the portal.
Sramana Mitra: How did that company ramp? There are two questions actually. How did that company ramp from a revenue standpoint? How did the company ramp from a services revenue versus product revenue standpoint?
Kurt Long: I’ll take the second question first. Services versus software was always going to fluctuate at a high of 65% for any given quarter with 35% software or software-related revenue being services. The low point is 50-50. In general, that was going to be the operating metrics of Open Network going forward. It was hard to ramp it all the way over to software.