Sramana Mitra: You said that this was a fast transactional sale that was solving a big problem. Can you succinctly summarize what the problem was that you were speaking to and successfully closing deals on?
Arthur Lozinski: The way that the companies were thinking about this problem was like checking a box. You work in IT, so you need to know where your connected devices are. It was rudimentary and transactional. We didn’t know how to articulate it then, but what we know now is that knowing where your devices are is a security measure and a compliance measure.
It’s about being audit-ready. There is a massive financial component and employee experience component to it. We didn’t know that back then because we were just checking a box. We would talk to the IT manager and the IT manager would say, “I need to manage my assets and I need a tool for it.”
Sramana Mitra: How did you get to the fact that this was a much bigger problem? Where did that insight come from?
Arthur Lozinski: It was obvious, because the problem was getting bigger. The time it took to get there just got longer. We realized how big this problem was getting and how much bigger it was getting. We knew it, but we didn’t have the sales acumen to do enterprise yet.
Sramana Mitra: What changed? Did you have to sell to a different buyer? Did you have to change the economic buyer?
Arthur Lozinski: The economic buyer was still in the CIO stack, but it was just higher up. We started following the chain which was, “I need to manage my assets.” The question then was, “Why?” and then they say, “My boss said so.” We go to the boss and say, “Why do you need to do this?” We went all the way to the Board and then we realized that this was a compliance and security measure.
We realized that these were our value pillars. When our team realized these value pillars, we started talking about them, and said, “Hey, if we are helping you with all of these returns on your investment, this does not warrant $25,000. This warrants $2 million.”
We got in tune with the value that we were providing and started charging accordingly. We were leaving a lot of money behind earlier. It was an interesting psychological thing too, because it didn’t make companies value our solution. If the CIO saw that they were paying $15,000 for it, the assumption, that it couldn’t be that important, couldn’t be further from the truth.
Sramana Mitra: Did the 50 customers that were paying roughly in the $10,000 to $25,000 range flip to the $2 million per year price point?
Arthur Lozinski: A lot of them. I can name a few that have grown with us. They started with smaller companies and are rather big now. Of course, you will get churn in those instances.
We had a lot of conversations where we’ve had to call the customer and say, “This is the new model. We need to get you to this price. We will work with you and make it as easy a transition as possible, but we need to charge a fair amount for our solution.” That’s what we did. Some companies left and came back and some customers agreed that this was the right move.
Sramana Mitra: What happened to your revenue when you made this pivot in the positioning?
Arthur Lozinski: At that time, we now had social proof. We were doing multi six-figure deals with multiple companies. We now had a pretty nice business and we were growing. We were able to move to the next phase of the company.
Sramana Mitra: What did you do by way of financing? Did you raise more money or was the revenue model enough to see you through?
Arthur Lozinski: We had always operated the business in a cash-efficient way, because for a long time we weren’t operating any cash. Our goal was never to raise money. The goal was to capitalize on the business so that we could grow.
We never felt the timing was right until this year. When we saw that we had all the dials in and when we felt that this could be a billion-dollar-plus business, that’s when we found the capital partners for raising funds.