Sramana Mitra: Was K-12 also consulting services and implementing identity management solutions kind of projects?
James Litton: Yes. Keep in mind that as we were doing this, we were doing projects for all types of organizations. It’s just that the majority of them was K-12.
Sramana Mitra: The business, however, were these projects? You were basically consulting services for these projects?
James Litton: Exactly. I think this is really instrumental to the story. Consulting companies are a dime a dozen. Most consulting companies have this basic philosophy of doing whatever it takes to get into the account. Once you get into the account, you then change order the customer to death. We took the approach that we’re not going to operate that way.
Back in the 90s, we used to talk about heavy customer focus. We’re going to be trusted advisors to the company. We built this implementation methodology that we called Rapid Identity. The idea was to take these projects that we were doing, that were traditionally projects that lasted 18 to 24 months in big companies and distilled that down into an implementation methodology that, if executed on correctly, was about a three-month implementation. We built our reputation on this rapid implementation methodology.
Our philosophy was if we did that, the customers would respect that. They would, ultimately, come back to us anyway. We were hugely successful in this. So much so that when we converted to a software company in 2009, all of our customers came with us even though we had sold them on other solutions.
Sramana Mitra: Let’s actually go through 2007 to 2009. I have a few questions. First and foremost, how did the consulting revenue ramp between 2007 and 2009?
James Litton: Our revenue, without getting specific into what those numbers were, have always grown at 30% to 40% year over year.
Sramana Mitra: At what point did you hit the $1 million mark in your journey? How many years did it take you to get to that number?
James Litton: It was probably by 2008 that we were already north of $1 million in revenues.
Sramana Mitra: It sounds like in 2009, you introduced a product and not just the services.
James Litton: Yes. This is another interesting twist in the story. We built identity automation with our own funds. We never took a penny from anybody.
Sramana Mitra: This is great. We have a book called Bootstrapping Using Services. The methodology that you followed is something that we espouse, support, and have numerous case studies of. I’ve already recognized exactly the methodology that you followed going from services to products. That’s why I want to double-click down on that particular shift. I want to understand how you identified the idea around which you built the product.
James Litton: I’ll say first off that the transformation was something that we had been talking about for quite a while. Ultimately, we decided in 2009 that we don’t control the software portion of our sale. In order for us to have a services project, we have to sell the software too, which incidentally made Identity Automation a fantastic partner to Sun and Novell because we weren’t just looking for handouts.
We were actually driving customers to them. That’s not what most of their partners do. Most of their partners are looking for services opportunities. We were out there creating our own services opportunities, which meant that we were driving the software sale. As a CEO, I was the guy focused on all the business operations. I didn’t like that. We were successful at selling managed services, but I still didn’t control the software portion of the sale.
Long story short, based on a lot of conversations and my partner’s belief that we could build the software on our own, we decided not to go out and hire a lot of developers. We hired just three developers. We were prescriptive on what we wanted to build. This is the other thing that is of paramount importance. We knew exactly what we wanted to build before we made the decision to go out and hire people. The idea was to start with a very basic provisioning solution. That’s what we focused on. We hired all three developers in November of 2009. Then we sold the first product on May 10, 2010. It was very rapid.