Sramana Mitra: How long did it take you to reach a million dollars in revenue?
Hugh Massie: We were about two years into it before we got to that level.
Sramana Mitra: That was still based on the product sales model, right?
Hugh Massie: Yes.
Sramana Mitra: What was the next major strategic thing that you did to grow the business?
Hugh Massie: The next major thing was we redeveloped the platform and the product range. We launched that in 2011. At that time, we had a much more scalable platform and we also added our Business DNA and Communication DNA at that time. The Financial DNA was selling to financial advisors to understand clients.
The Business DNA was selling to organizations – any organization for leadership development, career development. Then we built one called Communication DNA which is used for sales and marketing purposes to help deliver customized service experiences based on communication. At that time, we put all those products online on one platform talking to each other.
Sramana Mitra: I think I need a little bit of clarification here. Between 2006 and 2011, you no longer stuck to your financial advisory product. You were doing other products.
Hugh Massie: From 2006 to 2011, we were exclusively selling products and services that were related to Financial DNA. In 2011, while we were selling Financial DNA, we were developing new products. We didn’t put them on a new technology platform with a full branding till 2011.
Sramana Mitra: From 2006 to 2011, the business is still the one financial advisory product sold in a product licensing mode.
Hugh Massie: Yes.
Sramana Mitra: What scale did you reach with that product?
Hugh Massie: We got to about $3 million.
Sramana Mitra: All this is organically financed? You grew the business with your own money.
Hugh Massie: There’s no outside financing.
Sramana Mitra: In 2011, however, you’re about to make two different moves. One is, you’re going to subscription-based pricing and you’re introducing a new set of new products.
Hugh Massie: Correct. We made a wholesale change in 2011.
Sramana Mitra: On the subscription front, what did the business model do to your business?
Hugh Massie: It helped it grow a lot because it was no longer just a transaction for people. We got a lot more committed clients. It enabled them to be more committed to our product because it was easier for them to pay us a fee either once a year or every month. They didn’t really think about how much they were using it. They would just use it. We removed the barrier from it being a transaction every time they use our system to just an annual fee. They would bake it into their servers. That was the psychological shift.
The other psychology shift was around how you price that service to get them to buy. That was probably the big shift. We already had metrics on how many discoveries or assessments an average advisor would have. We roughly knew the balance of what was fair and reasonable on the average. That’s how it worked. We got a stickier customer because of that.