Sramana Mitra: You have chosen to keep this bootstrapped until this point?
Jagan Reddy: Yes.
Sramana Mitra: What are your thoughts about that? You have a profitable structure. You must be getting tons of calls from investors, but it sounds like you have chosen not go in that direction.
Jagan Reddy: We have spoken with several investors in the past. This is a very niche area. Not many investors understand this. If we want to create a scale for this market, it will take time. We have built this market for the past seven years. Today when we talk to the same investors, they clearly see how huge this market is. They see an amazing market opportunity. From an investment perspective, we are talking with investors. We are looking forward to do our first round of investment, maybe, in the next six months.
Sramana Mitra: You are going to try to accelerate by bringing some funding in. What levers have you identified that you can pull with significant additional cash?
Jagan Reddy: One of our bottlenecks is the resources. Since we operate with our own cash flow, we manage how many people we hire and how we operate. We believe that if we can invest and bring in more people to support the sales people, we can really grow this business big time. The demand is very high. Today, we aren’t able to even meet the demand.
We are still not doing any big outbound marketing. We are just living with inbound. Just the inbound demand itself is growing pretty high. To meet all those demands, we need a bigger team. We are providing our software on the cloud. The cloud infrastructure really needs a lot of investment to scale and secure. That’s where we will be taking most of our investment.
Sramana Mitra: Is there anything else that you want to highlight in this interview?
Jagan Reddy: I think the very important part is how we have created this marketplace. This market space has existed but we identified that there is a huge market here and how people would need an engine to process their revenue. Today if you look into the market, most of the companies are shifting towards the subscription business.
Typically you might see the subscription business in the technology field. A simple non-technology subscription business is Dollar Shave Club. When you go into the subscription business, the volume is very high. You’re going to generate lots of transactions. You’re going to have a lot of revenue accounting policies. Typically when you go into subscription, customers can stop the subscription anytime or upgrade the subscription.
What that means to the business is, that makes it more complex to capture the transaction and account it right. You also need to forecast your future revenue so you understand your business and you know how your business will grow. There’s a lot of analytics in all of this. The change in the business model is a great catalyst for Leeyo to capture this market.
I mentioned the creation of a group for all the accounting and revenue accounting team. Many of our customers have always asked for Leeyo to come up with a user group just for revenue accounting. We have been waiting for some time so what we can create one. We are close to a hundred customers now and this year, we decided to start the revenue user group and launched our first revenue recognition event. It’s called Revenue Recognition Summit. We had amazing support from our partners. We had more than 11 sponsors including four big accounting firms. On top of the sponsors, we had close to more than 300 people registered for the event. Typically, you would see 60% attendance. We had close to 90%. It was a well-received event. At the end of the event, everybody said, “Why wait for every year to do this? Why can’t it be more frequent?” We are planning to set up small roundtable sessions for these user groups. We are planning to do the event every year and bring all the revenue teams under one roof.
Sramana Mitra: Excellent execution. I’m very happy to meet you. I wish you all success.