Sramana Mitra: You had a virtual company with developers mainly from Eastern Europe.
Peter Zaitsev: Initially, yes. We gradually expanded to other countries. Now we have about 35 different countries.
Sramana Mitra: It’s still a virtual company though.
Peter Zaitsev: Yes.
Sramana Mitra: How many people do you have today in this virtual mode?
Peter Zaitsev: About 200.
Sramana Mitra: Go back to 2010. You were doing this virtual company with about 10 people. You were doing tools and enhancement services on MySQL. What happens next?
Peter Zaitsev: The customer who had emergency help would buy emergency consulting from us. What we found is that responding to emergencies in the middle of the night is not something people enjoy too much.
There would be surges as well. You have Black Friday. It’s a lot of work. Then it’s quiet after. It’s hard to maintain a stable team in that ebb and flow. We transitioned our business to subscription.
Instead of paying us per hour, you would subscribe for a year and have as many cases as you want. For the next three to four years, we transitioned from consulting being 100% to consulting being 20%.
Sramana Mitra: How big a business were you able to build in this mode? What kind of revenue levels did you hit by about 2014?
Peter Zaitsev: We got to more than $10 million.
Sramana Mitra: Excellent. How many customers?
Peter Zaitsev: A few hundred customers in terms of subscribers. In terms of consulting, it was more than 3,000 customers. If you have your own DBA or database expert, you can subscribe for support and use our help. For companies who do not have a DBA, they get us to manage their database completely.
Sramana Mitra: When you have a pure support services subscription, what is the subscription fee versus if you go from support subscription to a managed service? How much higher does the fee get?
Peter Zaitsev: There is not an exact number. For the same kind of environment, that would be several times more expensive.
Sramana Mitra: What percentage of the customers that you started with transitioned to the managed services mode?
Peter Zaitsev: The point for us was not to transition everybody to managed services. That is a more high-end experience. If you look at us right now, the managed services typically are smaller customers. We have close to a hundred of those folks. 20% of our revenue is from managed services.
Sramana Mitra: What is the revenue now? What point have you reached now?
Peter Zaitsev: $25 million to $30 million.
Sramana Mitra: Almost 100% of it is subscription.
Peter Zaitsev: That’s right – about 90%.
Sramana Mitra: It’s a virtual company that spans 35 countries with 200 plus developers. Then you have $25 million to $30 million in revenue. It’s 100% bootstrapped. You haven’t taken any financing from outside, right?
Peter Zaitsev: Yes.
Sramana Mitra: You have a fantastic story. Thank you for your time.