What is the best bootstrapping tactic for B-to-B startups? Solve an acute customer pain. Get paid an advance to do so. Leeyo Software CEO Jagan Reddy followed this strategy to bootstrap to $20 million. He built a niche software that solved a very specific problem and started selling it to enterprises for a lot of money. This story is a textbook case study of how well you can scale with no outside financing if you can identify a burning pain point in customers who are willing to pay a LOT to solve that pain.
Sramana Mitra: Let’s start at the very beginning of your journey. Where were you born, raised, and in what kind of background?
Jagan Reddy: I was born in India. All my schooling was done in India.
Sramana Mitra: Where in India?
Jagan Reddy: In Chennai. My schooling was all done in Chennai.
Sramana Mitra: Where did you do college?
Jagan Reddy: Guru Nanak College in Chennai. My education was mostly in the accounting field.
Sramana Mitra: What did you do after you finished college?
Jagan Reddy: I actually had a parallel education. While studying accounting, I was also doing some IT type of training. Once I came out of college, I started working for a well-established company in India called Goodrich. They specialize in a lot of different products, ranging from manufacturing to cosmetics. I joined them in 1996 to support their ERP implementation. I was part of the finance side of the ERP implementation.
Sramana Mitra: How long did you stay there?
Jagan Reddy: I stayed with them for three to four years. I traveled across India trying to implement the software. Then I worked for another company in Bombay. I worked there for a year.
Sramana Mitra: What year does this bring us up to?
Jagan Reddy: Around 1999.
Sramana Mitra: What did you do in 1999 after you left this company in Bombay?
Jagan Reddy: The company had a project for me in the US. I came to the Bay Area for that. I spent three months on the project and impressed with my work, my project was extended to almost two years with the same client. After two years, I decided to come back to India.
I had a job offer from Juniper Networks, a leading networking equipment manufacturer. This happened in 2001. I decided to stay in the US and took the job with Juniper Networks. My job was all about accounting-related software and supporting the IT in finance. I spent almost eight years there. I worked there from 2001 to 2008.
Sramana Mitra: Then what happened in 2008?
Jagan Reddy: Juniper went through a major shift in their business model where they were challenged with a lot of revenue recognition and accounting automation issues. They asked me to go and find a software that they can use and implement for their automation. I did a lot of research, but I couldn’t find a software that could help automate what they were looking for. In that process, we decided to custom-build for Juniper. I went and built a custom solution for Juniper, but it was all tailored to Juniper’s requirements.
Since I was researching the market, I figured out that there’s no software that could solve the complexity and I also understood that the issue was there for other customers as well. It was not just for Juniper. I did more market research. I talked to several companies. I understood the challenges and why they are not able to automate this, and why the ERP vendors are not able to provide a solution that cannot meet all this. I understood the complexity in doing this automation.