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Bootstrapping to $100 Million Using Services from The Netherlands: Pierre and Fred Guelen, Planon Software (Part 3)

Posted on Saturday, Feb 6th 2016

Sramana Mitra: I imagine that you immediately went and sold the same product to a bunch of other customers. Can you talk about some of the early customers and what kind of price point you sold it at?

Pierre Guelen: At the engineering firm, I did my own consultative selling. Here, I needed a sales team. When the software was ready, we hired a few good sales guys and a marketing lady. It took at least half a year to get that on the road and to build a pipeline. It became an overnight success in Netherlands. A number of big companies were pleased about it.

Sramana Mitra: After the first product was in the market, how much revenue did you do?

Pierre Guelen: Half a million.

Sramana Mitra: The next year?

Pierre Guelen: I don’t know exactly but we grew very fast. We doubled every year in those days, or even more.

Sramana Mitra: Did you keep your consulting business as this product was maturing?

Pierre Guelen: We kept the consulting business because it financed the growth of the company. It was a successful engineering firm. It made enough money to spend more on the software company than it was earning. In the first year, we always made a loss in the software part and made a profit in the engineering part. I didn’t need an investor then to finance my growth because I could finance this out of my cash cow.

Sramana Mitra: Right. How long did you continue in this mode? What was the distribution between the consulting business and the software business? What percentage came from consulting? What percentage came from software?

Pierre Guelen: After a few years, it became clear that software was the big thing. We, as a total group, became a software company. The interesting thing is that today, I still have 20 building engineers in my company with six other people making software.

Sramana Mitra: Let’s look at some of the markers. You started the product in 1995 after 10 years of consulting. In 2000, where were you revenue-wise?

Pierre Guelen: We were around $8 million. At that moment, we were the market leader in Netherlands. That was a good market to be in. We were making a profit every year. There was this famous book about the software market that said, “Software is a global market and you need to operate as a global company to survive long term. Otherwise, you will beaten by a big American company, for example.” We had to redo the building four times and only the big companies can do that. We needed to become a world market leader or we will go under in 10 years. That was the main driver that we had to speed up internationalisation. Since that, we added one country every year to our portfolio.

Sramana Mitra: In the 2000 to 2010 timeframe, it sounds like one of the big highlights is you had to change architecture of the product as the market was evolving going all the way to cloud applications. Of course, you also went global during that period. What other strategic moves did you make between 2000 and 2010?

Pierre Guelen: We adapted ourselves from a purely technical-driven development organisation into a more market-driven organisation. We expanded our market. According to a Gartner study, the market wanted more an integrated workspace management software (IWMS) approach. We adopted our software towards that kind of concept. That helped us with positioning our system against the big multinationals. That meant that we were recognised in the sector we were. That helped us a lot in those years.

Other things that we did was the internationalisation. We chose the sectors that we wanted to be in in those markets. We didn’t go full out in the whole area. For example in England, we went first for universities and became market leaders in England in the university sector. In America, we concentrated on banks and pharmaceuticals. That’s where we had our first customers. Then we expanded slowly to other sectors. We pointed out what we wanted to achieve in what market. We didn’t spend all of our marketing money at everything.

This segment is part 3 in the series : Bootstrapping to $100 Million Using Services from The Netherlands: Pierre and Fred Guelen, Planon Software
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