Sramana Mitra: What was the financial framework of this government relationship?
Robert Hoehn: Actially, we did most of it for free.
Sramana Mitra: How were you getting by? How did you sustain the company?
Robert Hoehn: We put a small cash infusion in to start off. We quickly pivoted to try to sell to enterprise customers as well. It’s funny. There’s always training budget in government, right? We actually did a lot of training on how to run social media campaigns, how to do crowdsourcing, how to moderate the crowd. That was one of the ways we got by for the first six months.
Sramana Mitra: You got a bunch of government training contracts and that was the primary cash infusion or did you actually score paying enterprise customers in that period?
Robert Hoehn: We did both. There weren’t a ton of examples of software startups selling to government. We wanted to do the work for the PR and to just force ourselves to get to that MVP quickly. We didn’t really know any startup doing that. We were nervous about it. We immediately said, “We know there’s a place for us in the enterprise.”
We reached out to any and all contacts we knew. We started pitching like crazy and we got some really great initial customers. We actually got the Boy Scout of America. We work with Navtech. We got a lot of good enterprise contracts pretty early on, and that really helped grow the business.
Sramana Mitra: Was there any pattern or signal in the enterprise customers of a particular segment or a type of customer that was resonating really well?
Robert Hoehn: On the departmental side, a lot of it started in IT. What’s interesting is, a lot of times, they’re expected to be futurist in the company even though they shouldn’t be the ones doing this. They should be setting up the software but not actually running the campaigns. A lot of the early stuff was IT-led. It was, “How can we improve service for our employees within the company?” That was the early start. That’s something I’ve learned even to this day.
I love that when you work with an IT department, they aren’t afraid to try new things. That’s something I love because, for a long time, a lot of people are afraid of crowdsourcing. The beauty of these IT departments is that they’re not afraid. They work with these things everyday so it’s no big deal, but convincing them to try it has always been a challenge for us.
Sramana Mitra: You started IdeaScale in 2008. How much revenue did you do the first year?
Robert Hoehn: I think it was about $60,000.
Sramana Mitra: How did you do the second year?
Robert Hoehn: Around $90,000.
Sramana Mitra: How long did it take you to get to a million?
Robert Hoehn: I think we hit it in 2011 – about three years.
Sramana Mitra: At this point in 2011, you hit a million dollars in annual revenue with no outside financing?
Robert Hoehn: Right.