Bootstrapping Using Services From Colorado: InteliSecure CTO Chuck Bloomquist (Part 3)

Sramana Mitra: You’re talking about protecting critical assets essentially.

Chuck Bloomquist: Yes, you can call it critical assets. Whether it’s IP or regulatory control data, to us, it didn’t really matter.

Sramana Mitra: How did you determine what was categorized as critical assets?

Chuck Bloomquist: It’s based on value to the organization. If your revenue for 2015 was based on this formula or this design drawing, then it has value to the organization.

Sramana Mitra: I got it. Those are the characteristics. How did you determine them algorithmically? Did it have to be manually categorized or was the algorithm able to auto-categorize? >>>

Bootstrapping Using Services From Colorado: InteliSecure CTO Chuck Bloomquist (Part 2)

Sramana Mitra: When was this company founded?

Chuck Bloomquist: In 2002.

Sramana Mitra: When you started the company, what were the circumstances? Did you and your co-founder put a product together and start selling to customers? Were there customers first?

Chuck Bloomquist: We really didn’t have a product. We just had a concept. We had an idea for a better way to perform security for organizations. We sat down and started mapping out a business plan for what we thought would be the most appropriate way to work with organizations that have sensitive information. That led us down the path of getting involved in understanding the process side of any kind of a conceptual project. More so, how we could map that to the handling of information in its digital form. That’s where we got our foundation from. >>>

Bootstrapping Using Services From Colorado: InteliSecure CTO Chuck Bloomquist (Part 1)

Chuck has bootstrapped a security company using services all the way up to $16 million in revenue and has recently raised private equity capital to develop a platform product.

Sramana Mitra: Let’s start at the very beginning of your story. Where are you from? Where did you grow up? What kind of background leads up to this story?

Chuck Bloomquist: I was born in El Paso, Texas. I spent most of my youth living in the Pacific Basin. After we moved out of Texas, we moved to Wake Island. Then, we went to Hawaii and lived there for a year or so. Then, we moved up to Alaska and the UK. I came back to Texas for college. I then migrated to Colorado.

Sramana Mitra: After college, you graduated to Colorado? >>>

Bootstrapping From Germany: Cleverbridge CEO Christian Blume (Part 7)

Sramana Mitra: How does your work play in to the work of the SaaS providers like Aria? They are managing the online SaaS billing.

Christian Blume: They’re managing a broader spectrum in a much stronger niche market. What do I mean by that? They go into any type of service that could be a subscription, billable type of environment. Whether this is your utility bill or access to a cloud service such as a Box or a Dropbox, they can do all of that. What they actually offer is a very small subset of the solution that we actually have.

You are talking about an Aria system. They’re very specific and concrete around the subscription facilities and the engines that they offer around it. What they’re typically missing is any type of invoicing that’s associated with it. If you want to work with that kind of solution, you need to manage your own payment methods. You need to have your own fraud management and understand how international fraud has an impact on any type of solution that you have in place. You need to set up all of these different aspects to it in addition to the solution that they offer. >>>

Bootstrapping From Germany: Cleverbridge CEO Christian Blume (Part 6)

Sramana Mitra: Was it a very profitable situation right from the beginning?

Christian Blume: This is the interesting part. When we started the business, we always said, “We’re only going to enter actual business opportunities if there’s a win-win situation.” I would never have signed off on any kind of deal in order to buy market share and saying, “I’ll go in with a very low price just in order to win that business.” We always sold on the value we could generate. We would typically be always a little bit higher priced than the competitors out there. At the end of the day, what’s a percentage point in additional cost if you have a percentage point in additional revenue? It makes a lot of sense to do that and work through it. That’s why we always went into a very profitable situation with our client. >>>

Bootstrapping From Germany: Cleverbridge CEO Christian Blume (Part 5)

Sramana Mitra: The natural question that comes to my mind based on what you just said is, how do you price?

Christian Blume: Our business model is, we take a share of the transaction. If somebody wants to work with us, they only pay for actual performance. There are no upfront setup fees. Nobody has to invest anything in us. They can get a full-fledged solution in 30 different languages with all of the different payment methods and currencies. They’re ready to go and sell worldwide when they switch on our solution. We only gain something out of this relationship if they sell something through us. Unless they do that, we don’t earn anything.

Sramana Mitra: You get a cut of every transaction. Is that how you charge?

Christian Blume: Exactly.

Sramana Mitra: Let’s go back to 2005 to 2006. How did you finance the company to get to your first launch? >>>

Bootstrapping From Germany: Cleverbridge CEO Christian Blume (Part 4)

Sramana Mitra: Very interesting. How much of this were you able to cobble together as you launched the product?

Christian Blume: We launched our first beta on November 11, 2005. We worked together with a company that had a variety of different software solutions ranging from utility down to antivirus products. We were good friends with the CEO of the company. We said to him, “Would you give us a try?” He said, “I do a lot of mailings on a weekly basis to different target audiences. I’ll give you an emailing opportunity.” That was when we generated the first €15,000 in revenue.

To us, it was the proof of concept that our solution was working. The CEO said, “This really worked out nicely.” So he continued to give us additional mailings. If I remember correctly, three months after we had launched our beta, he actually said, “I really like your solution. You’re doing an excellent job.” That was the kickoff of Cleverbridge. >>>

Bootstrapping From Germany: Cleverbridge CEO Christian Blume (Part 3)

Christian Blume: What it allowed us to do was put different checkout processes. We didn’t care whether this was checkout processes built on our engine or something that we would compare against—somebody that was running on an in-house solution or an outsourced solution. We really compare how the conversion rates really evolve with the implementation of those different checkout processes. The good part about this was that our engine’s flexibility allowed us to generate much higher conversion rates. Most of the time, we came in there and we were able to bump up the bottom line revenue by, sometimes, up to 20%, which is huge.

Sramana Mitra: 20% bump-up in revenue is huge. If you don’t mind, I’m going to dig deeper. Let’s do a use case. Were you going after large e-commerce sites? What kind of sites were you going after?

Christian Blume: Our target market was never the small shareware publishers who were selling a couple of licenses on a monthly basis. We were going after those organizations who would be selling 100,000 licenses on a daily or weekly basis. It was experienced e-commerce companies. >>>