Sramana Mitra: How much money did you raise in 2013?
Jason Kassin: Our Series A was $20 million.
Sramana Mitra: How many companies did you acquire?
Jason Kassin: We acquired two companies. The first one was a company called Jaguar. In between, we acquired a third company, but that was of a slightly different complexion. It was a smaller acquisition that involved another raise where the previous owners of that company participated in the raise.
Sramana Mitra: You were at about $4 million to $5 million when you raised the $20 million. After this roll-up, what did that put you at?
Jason Kassin: We didn’t acquire recurring revenues in the acquisition. They didn’t have a SaaS model.
Sramana Mitra: But at least in the client-server case, you acquired a whole lot of customers. It did bring in a lot of customers.
Jason Kassin: It doubled us. It helped us transition those customers to a SaaS model. The was the biggest challenge – migrating the users from the older technologies. This is enterprise accounting software, in many cases, that you can’t just lift and shift. It’s a several-month process. It’s a long tail investment. Ultimately, it was a good investment.
Sramana Mitra: Where are you now?
Jason Kassin: We’ve quadrupled since our initial financing. From a growth standpoint, we’ve done some acquisitions. We have enough breadth of services and technology that we can grow organically without having to supplement with inorganic growth. If inorganic growth makes sense, we’ll do that.
It’s challenging. When you look at sub-$1 million companies to acquire, the founders may have very high expectations on valuation based on what they read in the papers. It’s very challenging because those multiples cannot be underwritten because the revenue isn’t recurring. Maybe the revenue is a lot of professional services. Maybe the contract is written in such a way that it’s not an obligation to renew automatically.
There’re all sort of things that can add or decrease value when you’re evaluating a company that may diminish what someone’s expectations are. You have a lot of folks who have built really interesting companies and businesses. From an economic engineering standpoint, it’s hard to underwrite them at a higher multiple. That makes it challenging when you’re dealing with a smaller company you are trying to acquire.
Sramana Mitra: Do you get time to write still?
Jason Kassin: No, I retired from writing in 2005.
Sramana Mitra: You don’t feel like writing anymore?
Jason Kassin: Well, I write software. One of my best friends had a premiere of his film in Cannes. I got to enjoy all of that. I was able to enjoy all of that without the stress. My temperament is such that I’m better equipped to run a company like this than to be writing screenplays. Maybe that will change.
Sramana Mitra: Great. Thank you for your time.