Sramana Mitra: How much did the first customers pay you to buy this software?
Neil Araujo: What mattered for us at that point was that somebody was using it. They did pay us. It took two years. The second customer was more painful because it took six months. The story over there is you have to be patient with these things. You have to persevere.
Sramana Mitra: You have to pursue. You have to be patient but you also have to survive, which is why how much people pay is really important. Otherwise, you could go out of business.
Neil Araujo: That’s why, at that stage, watching our expense structure is really important. You never know how long that will take. What you can control is the expense structure. Being an immigrant and not knowing any better, you’re naturally attuned to that. We got our second customer in New York. After that, they came in in at a fairly regular clip. Before we knew it, we went public in four years.
Sramana Mitra: You went public in four years?
Neil Araujo: Yes.
Sramana Mitra: Between these first two customers that we discussed, what else happened? When you said they started coming in at a fairly good clip, what drove the inflection point?
Neil Araujo: There was a major competitor that got bought by Novell. That was one driver. The second was Y2K was coming around, so people were trying to upgrade their systems. There was an unnatural acceleration in the market for systems like ours. That was one of the drivers. We also developed a reputation in the market for a product that just worked. We tended to hire a particular kind of individual, which happened unconsciously.
When I look back now, I can see the pattern of the type of individual that we hired. In the year 2000 after we went public, we had hired a new VP of Marketing. He sent his PR person out to interview customers, “Why is it that you buy from iManage?” She came back with hours and hours of videos. The common theme was that the product just works and they loved the people at iManage.
Sramana Mitra: You were based in Chicago then?
Neil Araujo: Yes.
Sramana Mitra: All this was happening in Chicago. How many people in the company were there when you were in this inflection point?
Neil Araujo: We grew pretty rapidly. By the time we went public, we were close to 150. We grew pretty rapidly during that period. We did take funding at one point from NEA. We were already cash flow positive at that point.
Sramana Mitra: At what point from the beginning of the company did you bring NEA in as your first investor?
Neil Araujo: It was about three years later.
Sramana Mitra: How much were you doing in revenue at this point?
Neil Araujo: We were probably in the low double-digits.
Sramana Mitra: Fabulous. How much did you raise from NEA in that round?
Neil Araujo: $5 million.
Sramana Mitra: Your role was CTO?
Neil Araujo: I was the Product Manager.
Sramana Mitra: I see. Your friend ran the company?
Neil Araujo: No, he was the CTO. He was the guy who did a lot of the development. We brought in someone else to be the CEO. He brought a lot of experience with running the business as well as some of the early angel funding to the business.