Sramana Mitra: After the client from which you identified the business opportunity of turning this into a product, who was your next client? Once you turn it into a product, how long did it take you to start acquiring actual clients?
Jason Kassin: I think the number two client was a company in Amsterdam, which was interesting. Almost immediately after the launch of our system, we were exposed to a non-US centric approach to the business. That was very helpful in the way we contemplated things like handling multiple currencies. That was pretty early on when we were exposed to additional companies that were similar in business processes to the companies we were working with in the United States.
They attended the same markets and festivals where they were buying and selling films and appeared in the same circuit, if you will. They had a different approach because they were either a Hong Kong-based or Dutch-based company. It was interesting, from our standpoint, to look at how different companies and different geographies were dealing with the same problem. We subsequently got customers in Germany and UK.
We’re based in Los Angeles so we had quite a few customers in Los Angeles. We started branching out to other parts of the supply chain where our initial customers were sales agents who were licensing content from producers and then selling it either internationally or domestically to distributors. We started to get more into the distributors themselves or what I’d call the home entertainment providers. These are folks who were doing straight-to-video releases. They were creating DVDs. There was a huge business around BlueRay.
It was an industry that, for a while, was just amazing. It transformed almost overnight because of the advent of video on-demand and other technological advances. It has been a fascinating study to see a company like Netflix become the major distribution engine for content and now the major production and acquisition engine for the creative itself. They have practically become the biggest studio in Hollywood. They’re driving a lot of innovation on both the business side and the creative side.
Sramana Mitra: What did you figure out about pricing? How much were they willing to pay?
Jason Kassin: Here, I give credit to my brother. Initially, we would charge a license fee and we would have a support fee. We studied the industry. What we found was that folks were having trouble stomaching that initial investment because it was substantial.
My brother, without realizing it, said, “Why don’t we just charge somebody a monthly fee? Instead or charging somebody $20,000 upfront, let’s charge them $1,500 a month.” Eventually we completely got rid of the licensing model. We’re 100% SaaS. 90% of our revenue is recurring revenue. Typically, a customer signs up for a three-year term and then that’s a subscription that included access to the software, support, and maintenance.
Small companies can use our software. Medium-sized companies and enterprise can use our software. We handle customizations with configurations in the data itself rather than custom UIs. We’ve certainly matured. Over the last few years, we’ve built our whole system on top of an API layer that allows customers to access the data either through our UI or programmatically through APIs. They can build their own tools on top of it. They can connect to other systems and various B2B websites. Our tool has evolved to become more of a platform than just a product.