Sramana Mitra: When did you start selling the product in this whole gain share model? You said that 2008 is when you started two and a half years of services mode while you got the handle of what the problem was and what product to develop. Was 2011 your first year of selling the product?
Nilay Banker: Yes, 2011 was when our first product came out. We started with invoice automation. Then in 2014, we came out with total discounting. It took two to three years for the base product to mature. We got a healthy base of happy and large customers. We focused on the large customers.
Sramana Mitra: How much did you do in 2011, for instance?
Nilay Banker: 2011 wasn’t a lot in terms of revenue. We were just beginning. We probably did a quarter of a million dollars.
Sramana Mitra: Did you fund all this from your revenues on the services side or did you bring in any outside money?
Nilay Banker: Not a cent. We have not borrowed or taken any outside money. The services revenue was funding product development. Then our first few customers helped fund the product development. It was just a great cycle of revenue from software feeding back research and development, which is what we continue to do. About 30% to 40% of our revenue goes back into research and development even today.
Sramana Mitra: In terms of customer adoption, was it a difficult sale?
Nilay Banker: Interestingly enough, our sale is done in one and a half hours. What that means is when we go meet a customer, we go into a room of skeptics. They do not believe our message. They do not believe in what they see on our website. We do a demo. We do a presentation. Within an hour and a half, they’re sold. They see it in action.
We always do a live demonstration, which tells them that this is exactly how our solution will work in your business environment. Everything we talk about in terms of the pain we would address, the solution we would provide, the benefits they would realize resonates with them. They get to see a complete solution. Then it is just a matter of agreeing on terms and negotiating on price.
Sramana Mitra: How many customers did you end 2012 with?
Nilay Banker: The first few years, we focused on just one or two customers. The advantage of doing that is, while we were developing the product, we are learning more and more about the problems that the customers are facing. We are developing the product and we are not just doing it because we want to build a feature or we want to do something.
We are actually building features and capabilities specifically addressing the problems of those handful of customers – real life examples and real pain. In a way, customer-funded development. It’s not just funding from the consulting services but also a little bit of customer-funded development. The customer got a lot of value in what we were building for them. By the end of 2012, we probably just had three customers. They were, and are, our anchor customers.