Bootstrap to $25 Million from Utah, Raise Money Later to Scale to $100 Million: John Pope, CEO of Jive (Part 6)

Sramana Mitra: Great. How far does this bring us to? You mentioned that you went up to $25 million with no outside financing. Would these two major strategic approaches cover that 0 to $25 million journey?

John Pope: That gets us to $25 million. We’ve always had a broad appeal. Our product works for 99% of the businesses out there. The vertical and the channel program really helped us to get to that $25 million mark.00

Sramana Mitra: You introduced this in about 2010?

John Pope: It was in 2009 when we officially started the channel program.

Sramana Mitra: When did you hit the $25 million mark?

John Pope: 2013. We really had an inflation point in 2010 to 2011 timeframe.

Sramana Mitra: At this point, RingCentral and Grasshopper were key competitors. What was your approach to competing?

John Pope: We didn’t really compete with Grasshopper. Grasshopper was more virtual PBX. We did compete with RingCentral. Instead of really competing with RingCentral or any of the other players, we were collectively disrupting a $30 billion industry. In a sense, we were running the same direction. We would see each other here and there on the battlefield but for the most part, we were running out to take land away from the hardware PBX.

Sramana Mitra: That’s what happens in a lot of disruptive situations in various industries. $25 million run rate in 2013.

John Pope: We had taken interest form investors. We always love the culture of bootstrapping and the underdog mentality. At some point, the offers made a lot more sense. We ended up fielding a bunch of calls and taking some meetings with these outside investors and we selected one of them. We went with Northbridge Growth Equity. Never really took seed funding. Never took venture capital.

Sramana Mitra: You went to private equity.

John Pope: Yes, growth equity seemed to be a perfect fit for us. They wanted companies that had already shown success and they wanted to put money into these companies to help accelerate. It wasn’t an invest in 10 companies and hope that one or two make it really big.

Sramana Mitra: Right. That’s a really different business. What was the nature of the private equity investment? Did the founders take liquidity as well? How much of the new money was spent in growth financing versus liquidity?

John Pope: We had one founder who had moved on. He took a decent amount of liquidity. At that time, we took around $21 million or so. It was for a minority stake. There are pros an cons to doing that. The downside is we had to grow organically for a long period of time and RingCentral is a bigger company than we are. It’s all a matter of mathematics.

The upside is that we were able to retain and continue a large majority of the equity as a founding / managing group. We continue to have support from the investor but we have a lot of skin in the game. We’ve got a healthy financial situation and a healthy set of incentives. That has been the upside.

This segment is part 6 in the series : Bootstrap to $25 Million from Utah, Raise Money Later to Scale to $100 Million: John Pope, CEO of Jive
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