Sramana Mitra: What happens next?
Paresh Patel: We started to prepare the company for scale. We had just received our Series A. We got $12 million in the bank. I first hired a COO and then a CFO. We opened up a new office. We messed up. We hired too fast and too big. Too many positions that didn’t really need to be hired for yet.
Sramana Mitra: Series A is more about how to build the product and how to sell the product.
Paresh Patel: Yes. We made a lot of mistakes.
Sramana Mitra: Who was your Series A investor?
Paresh Patel: Matrix Partners.
Sramana Mitra: Who from Matrix?
Paresh Patel: That partner is no longer with the firm.
Sramana Mitra: The investor should know to guide you in that direction.
Paresh Patel: This was done in conjunction with them.
Sramana Mitra: Right. I’m surprised that they were willing to make those moves.
Paresh Patel: They were wrong hires.
Sramana Mitra: When did you course-correct and find your stride back?
Paresh Patel: I very quickly realized that this was not on the right track. By January, I had to make some very difficult decisions. We were running out of cash.
Sramana Mitra: You burned through $12 million.
Paresh Patel: Yes. We did some layoffs. We got rid of most of the people who we had hired and refocused on the product.
Sramana Mitra: That’s what we emphasize greatly. Early-stage business building is to focus on product.
Paresh Patel: Exactly.
Sramana Mitra: How did that go?
Paresh Patel: It was the first time in my entire career that I had to do a layoff. We had to do what was right. I had to rebuild the company. That summer, I was running out of cash. We ended up borrowing more money. We did a debt financing of $4 million.
Sramana Mitra: How did you do that?
Paresh Patel: It was a debt provider. Because we had Matrix as our backer, we were able to get that.
Sramana Mitra: With that $4 million debt, what milestones were you able to achieve?‘
Paresh Patel: We were able to course correct and get the product sold and deployed. The rest of it’s been going well since then. A lot of times, companies can easily get distracted, especially trying to prematurely scale. Premature scale is one of the worst things a company can go through. You think you need to build up all the staff and people, you don’t.
Sramana Mitra: You knew that there was demand for your product early on. By 2016, you’ve known for three years that there was demand. Did the market not start seeing competition?
Paresh Patel: There was competition but not direct competition. The competition was mostly credit card reader companies. Their solution was on a total cost of ownership basis. They were 10x more expensive than us. It was a more complex and expensive solution. We had filed for some foundational patents. I filed in 2013, 2014, and 2015. Even though we were a small company, I wanted to protect that. They continue to be granted. We have over 50 patents issued or pending today. We have robust patent portfolio which, for the most part, has kept our competition at bay.
Sramana Mitra: What kind of revenue numbers were you able to hit after you found your stride?
Paresh Patel: We’re still a private company, so we’re not talking about revenue, but Deloitte just recently ranked us as one of the fastest-growing companies in North America. Over the last three years, we had growth of 777%. We’ve been growing pretty nicely.
Sramana Mitra: In terms of customer acquisition, what is your primary mode?
Paresh Patel: When we think about customers, there are two different types of consumers. One is our business customers. These are the people who buy our device. They’re our direct customers. Then we have consumers who use our app.
Sramana Mitra: Those are users.
Paresh Patel: Exactly. For our customers, we do trade shows and direct sales. We also do advertising. There’s some inbound through trade publications.