Sramana Mitra: What was the pricing model for this product?
Fred Plais: It’s a yearly subscription which includes the old product. You’re getting your hosting part of the subscription but you also get all the DevOps workflow that comes with this. For a price starting at $15,000 per year, you get hosting capabilities, 24/7 support, all DevOps work flow without restrictions.
You can have as many staging environments as you want and deploy as frequently as you need. What we see for people that are taking the subscription is they deploy 10 times more than what they deployed before. That’s a huge improvement. You save a lot of time as well.
Sramana Mitra: How much MRR did you end 2015 at?
Fred Plais: We were probably around $100,000 MRR.
Sramana Mitra: The rest of the business was still going?
Fred Plais: That’s right.
Sramana Mitra: When did you spin it out finally?
Fred Plais: It was finalized in January 2016.
Sramana Mitra: In 2016 when you switched to focusing purely on Platform.sh, what are the next strategic moves that you made in 2016 after the spin off?
Fred Plais: The main reason for the spin-off was to be able to run anything on the platform. That was the focus. The coverage is really wide right now. You can have any sort of databases and services. Now, we sell direct to customer, but we also have very tight partnerships. We mentioned Magento as one of the tight partnerships we have.
We also started a partnership with a company called Orange. It’s a global company based out of France. They’ve got a cloud infrastructure. They decided to use our product to become their PaaS. We worked to build a white-label offering for them that they sell all over the world. 2017 was focused on scaling partnerships with large organizations.
Sramana Mitra: Orange is a reseller now?
Fred Plais: Yes, they resell our products. We have been training their sales team for three years now. It’s a very large sales team. We’ve been through programs where we help them sell the product in every region. They have presence in Singapore and US.
Sramana Mitra: How big is the revenue level from the Orange partnership specifically?
Fred Plais: I can’t say.
Sramana Mitra: What percentage of your revenue comes from Orange?
Fred Plais: The revenues that we get from OEM deals is very close to 45% today. We still have half of the business coming from direct.
Sramana Mitra: In terms of strategic moves, OEM is one piece. The rest of the business is direct.
Fred Plais: Correct. We sell direct and through partners.
Sramana Mitra: What is an average deal size for the direct partnerships like Magento?
Fred Plais: It starts at $15,000 per year and goes up to several hundred thousand depending on how many apps you want to deploy and the level of firepower you need.
Sramana Mitra: What about financing? Is this bootstrapped? Did you raise money?
Fred Plais: We did raise money for the open source company. We just raised $34 million a month and a half ago. Doing a pivot is not easy.