Capital Efficient Entrepreneurship from Utah: Ben Dilts, Founder and CTO of Lucid Software (Part 2)

Sramana Mitra: We’re now in mid-2009?

Ben Dilts: That’s right. At this point, it was still very much a one-man show. I may have collected a grand total of a few hundred dollars in revenue from some users. It was a product but it was in no way a company at that point. When I came down to return to school, I immediately sought out the entrepreneurial clubs to try to get in contact with people who could help build this up into a real company. I started meeting a lot of people in the local community here in Utah in an effort to gather a team.

Pretty soon, I ran into Karl Sun. He was a longtime Googler. He joined Google when there was a few hundred people there. He was their first patent attorney. >>>

Scaling a Cloud-Based Disaster Recovery Business in Silicon Valley: Axcient CEO Justin Moore (Part 4)

Sramana Mitra: We’re now in 2006?

Justin Moore: Yes.

Sramana Mitra: What did you do next?

Justin Moore: We started thinking conceptually about Ancient in 2006 and started investing seriously in 2007 and all of 2008. I took a bit of time quite frankly. I moved from the Peninsula up to San Francisco. I was a city boy. Then I was in the Peninsula, just working all the time. I moved to the city and got back to things I was interested in. >>>

Scaling a SaaS Business to 11,000 Customers: Booker.com CEO Josh McCarter (Part 6)

Sramana Mitra: What are some of the inflection points in the business when things started clicking in gear? We’ve talked about one of the key issues which is really turning into this metrics-driven organization. What other inflection points have you experienced in building this business?

Josh McCarter: I think there are a few. The early stage was just pulling the company out of the original parent company because that gave us the opportunity to go out and create our own business, our own P&L, and the ability to raise capital by ourselves. Being able to go out and start generating our early sales was very important.

Sramana Mitra: I’m asking a very specific question. It’s about an inflection point about customer adoption. As you trace the graph of >>>

Scaling a SaaS Business to 11,000 Customers: Booker.com CEO Josh McCarter (Part 5)

Sramana Mitra: What is your conclusion about where you wanted to pin your customer acquisition cost? How does that correlate to your lifetime value for your SaaS business?

Josh McCarter: All of the benchmark studies say that you need to be north of three times LTV. That seems to be the number where people feel like you’ve got your acquisition cost in line. Obviously, when you’re in enterprise sales, your months-to-payback are sub-12 months. When you’re in SMB SaaS, they’re usually sub-20 months. One of the things that we’ve really focused on is how to change some of our go-to market strategies so that we are less reliant on direct sales and more reliant on channel partners. >>>

Scaling a SaaS Business to 11,000 Customers: Booker.com CEO Josh McCarter (Part 4)

Sramana Mitra: What happened after you raised the $15 million? How did the business move? What were the strategic moves that you made to get to the next level?

Josh McCarter: The major move that we made was, we started investing in sales and marketing. We started building out our team. We took on some larger contracts that, in hindsight, were not the best things for us to do over the long-term for the company. They were big contracts. They were big name companies that helped us gain credibility with our investors and with other people in different segments. They were all multi-million dollar, multi-year contracts.

Sramana Mitra: What was wrong with those contracts? Typically, multi-million multi-year contracts are good news. Why was it bad news? >>>

Scaling a SaaS Business to 11,000 Customers: Booker.com CEO Josh McCarter (Part 3)

Sramana Mitra: What did you have in place when you went to raise capital?

Josh McCarter: We had a functioning framework of the software. We had about 700 customers and a team of about 30 people. It was, at least, beyond a prototype and proof of concept. The business was doing under $1 million in revenue. We had a good reputation and had some big marquee contracts with Hilton and some other hospitality brands.

We leveraged that saying, “This is real. There are transactions happening through the system. We want to extend it to other feature sets to help these businesses run.” Salons started signing up. We thought we could make a dedicated product for salons so we started pushing out in that direction. We ended up building out the business from there. >>>

Scaling a SaaS Business to 11,000 Customers: Booker.com CEO Josh McCarter (Part 2)

Sramana Mitra: What year does this bring us up to?

Josh McCarter: Around 2001.

Sramana Mitra: What happened then?

Josh McCarter: The company’s IPO was successful. After six years, I was looking to do something new. I went and joined a company called Spafinder. It was a travel-based magazine and was call center-oriented. We were trying to turn it into an online travel content company. We ended up joining with that team and worked on that business for a couple of years.

I ended up on the Board and decided to look up a few other business models. I connected with some friends in business school at USC. One of them had >>>

Scaling a SaaS Business to 11,000 Customers: Booker.com CEO Josh McCarter (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page.

In 2010, SaaS investors were less rigorous than they are today about unit economics. Josh managed to raise a $15 million Series A and acquired a significant runway to figure out the metrics of his SMB-focused SaaS business. Read more about his journey.

Sramana Mitra: Let’s go to the very beginning of your journey. Where are you from? Where were you born, raised, and in what kind of background?

Josh McCarter: I was born in Sacramento, California. I lived there till I was about 12. Then we moved down to San Diego. My mom’s family was an immigrant family from Greece and has a bunch of entrepreneurs. My grandfather and uncle on that side were very >>>