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Bootstrapping to $100 Million Using Services from The Netherlands: Pierre and Fred Guelen, Planon Software (Part 4)

Posted on Sunday, Feb 7th 2016

Sramana Mitra: What did that do to your growth? Between 2000 and 2010, how did the company grow?

Pierre Guelen: We’ve always had a steady pace of growth of an average of 20% a year.

Sramana Mitra: Let’s go to 2010. Are we talking about just one product in the cloud architecture in 2010?

Pierre Guelen: No. In 2010, we had one standard product that’s used by every customer, but it wasn’t a real cloud product at that moment. At that moment, 80% of our customers were still on-premise. Only in the last few years did we see a shift towards our cloud solution. We have an enterprise system. That means that this is a very traditional market. Most organisations like hospitals and governments want to use software on-premise because of security reasons. This has just shifted in the past three years.

Sramana Mitra: What year did you finish the cloud product? What year did the software business become a cloud business?

Pierre Guelen: First of all, 50% of our existing customers are still on-premise. We still bring out our product as on-premise. The new customers are going to the cloud, but we still have a lot of customers who are on-premise.

Sramana Mitra: So you’re saying that your old customers are not transitioning to the cloud?

Pierre Guelen: Slowly. We have the Ministry of Defense in the Netherlands and the NATO. We have the European Central Bank and a lot of banks all over the place. Not every one of these organisations wants to be in the cloud yet.

Sramana Mitra: What does the revenue look like between on-premise and cloud revenue?

Pierre Guelen: 40% of revenue is cloud-related and 60% is on-premise. That has to do with a large amount of business that we are still doing with existing customers. We have more than 40 models. Existing customers are always buying more models. They are expanding their footprint in their companies.

Sramana Mitra: What has been your strategy regarding financing this growth. You said earlier on that you chose to keep your consulting business to finance the software product business. Has that always been the case that you funded the company organically, or have you ever gone out for external financing?

Fred Guelen: About 20 years ago, there were some informal investors who helped plan the transition from the Windows technology to the Java technology. Those were just a group of informal investors. It was not a big amount but they stayed with the company for about seven to eight years. When they made a huge return on their investment, I was actually the one who purchased the shares in Planon from those investors.

Sramana Mitra: How much did these investors put in 20 years back?

Fred Guelen: It was a considerable amount compared to the status of the company. It was about a couple of millions.

Sramana Mitra: When did you buy them out?

Fred Guelen: That was about 12 years ago.

Sramana Mitra: How did you establish the valuation at which you bought them out? You didn’t have any external valuation in the company, right?

Fred Guelen: That’s correct. It was based on future expectations.

Sramana Mitra: Would you be willing to discuss at what kind of terms you bought them out?

Fred Guelen: I don’t think it’s relevant for the story. I paid a fair price. Because I was always connected with the development of the business, I had a lot of confidence in the future of Planon. That’s why I decided to invest.

This segment is part 4 in the series : Bootstrapping to $100 Million Using Services from The Netherlands: Pierre and Fred Guelen, Planon Software
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