Sramana Mitra: You still had enough cash to go through this SaaS transition and finish it in 2012?
Jagan Reddy: We started the transition in 2012. It was a major shift, so it was not going to happen within a year. It has taken us, at least, two years to do the transition.
Sramana Mitra: So 2013 was actually when you finished the transition?
Jagan Reddy: Yes.
Sramana Mitra: When the dust settled after this transition, where were you in terms of your bookings or run rate?
Jagan Reddy: In 2013 after the conversion, we were around $6 million.
Sramana Mitra: That’s annual run rate?
Jagan Reddy: Yes.
Sramana Mitra: You mentioned that in the 2009 to 2010 timeframe, customers were coming to you. It was all word of mouth. People are facing a specific transition requirement in the accounting standard. Did that evolve through the process? At what point did you actually have to put in a process of having to go find customers as opposed to just processing inbound leads?
Jagan Reddy: We are still doing inbound. We are not doing much of outbound. Most of our customers, even today, are inbound.
Sramana Mitra: Interesting. So you don’t have much of a sales or marketing engine.
Jagan Reddy: We are doing marketing, but I don’t think there’s enough lead generation happening where we are really converting them into opportunities. Most of our marketing is just to create visibility, but not for big lead generation. Most of our leads come inbound through our partners and word of mouth. We have minimal investment in marketing and most of our marketing is mostly inbound.
Sramana Mitra: We’ve so far gotten to 2013. You’re at about a $6 million run rate. You’ve finished the transition to SaaS. What happens in 2014? What are the significant milestones in 2014?
Jagan Reddy: Since we transitioned this business into a more recurring revenue business, we had clear visibility. We knew that out of the $6 million, we would automatically get the full million because customers continue to renew their subscriptions. Our business typically has very low churn rate. We don’t lose customers just like that. Our customers like our product.
Getting into 2014 was a great feeling where you’ve converted your business into subscription. You already knew that you are going to get this recurring revenue. Now how do we ramp up our sales and try to go to $10 million? That was our thought process. We achieved around $9 million in 2014.
Sramana Mitra: With the same general process – inbound leads with the SaaS model?
Jagan Reddy: That’s correct.
Sramana Mitra: What happens in 2015?
Jagan Reddy: 2015 was when we brought in our VP of Marketing. Even though the customers were coming through inbound, we wanted to have a bigger ambition of generating more sales. Our sales team was doing a decent job in generating leads. We decided to create more awareness and generate more leads. We typically do really well in the large enterprise business segment.
We wanted to do more business with the SMB’s, so we had to be really good in the marketing. That’s when we hired our VP of Marketing. 2015 is when we viewed the SMB market as really attractive. There was also a lot of interest in that market. We had a lot of mid sized companies. The price point is within $100,000 a year, but the volume gives us a pretty good install base. We went up to a lot of SMBs in 2015. I would say that we ended up booking close to $15 million in 2015.