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. >>>

Building an SMB SaaS Business: Stitch Labs CEO Brandon Levey (Part 5)

Sramana Mitra: You said that until 2013, things were really cash-strapped but it sounds like you were picking up customers and that you were getting validation for your thesis at some level.

Brandon Levey: Correct. By the fall of 2011, we had about 60 customers. I think our total revenue was $500 a month. That was also when we started learning about venture capital.

August 2010 was when we did our first pitch. It was with Ann Miura-Ko, a partner at Floodgate. She’s a phenomenal woman. At that time, I think she was 8 months pregnant with her third child and she was taking this meeting as a favor. We got to the third slide on the deck. She cut me off and said, “No business has ever been able to penetrate the small SMB market. Give me an example of one that has.” I gave her of one that I thought was good. She said, “I wouldn’t exactly call that a big win.” >>>

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 1)

We’re always impressed by entrepreneurs who manage to build sizeable companies without outside capital. Read how Cleverbridge has maneuvered to $40 million in revenue and doesn’t want to deal with venture capital and private equity.

Sramana Mitra: Let’s start at the beginning of your story. Where are you from? Where were you born and raised? What kind of background?

Christian Blume: I was born in Cologne, Germany. I moved over to the US when I was seven years old. I stayed for two years in Detroit. Then, I moved back to Germany again for a couple of years. When I was 15, I moved to London and did my International Baccalaureate over there. Then I moved back to Germany again and did my apprenticeship as a car mechanic. I then went to study Economics and went to an asset management company based out of Frankfurt, which was addressing high net worth individuals who needed investment opportunities. >>>

Thought Leaders in E-Commerce: Bob Dufour, President of Fusion (Part 7)

Bob Dufour: It’s having someone who can start understanding the psychology of that consumer and the opportunities presented to digital retailers. At least in my experience, that’s a big missing gap for somebody who really understands those needs during that journey, especially as millennials start taking hold and as their purchasing power gets bigger. I think they’re used to 99 cents. Trying to sell something for $30 is going to be a real shock to them. These microproducts with microprices is going to be important. Technology integration, cross-device integration, and digital enablement of suppliers—those are the things that I would say are opportunities that jump out based on our business.

Sramana Mitra: Listening to you, I’m thinking about this article that I wrote a long time ago in 2007 for the first time. It’s a definition of Web 3.0 that I came up with, which is a formula: 4C + P + VS. The four Cs are content, community, commerce, context, with personalization and vertical search. You may want to look up some of that writing because a lot of what you’re saying is the commerce elements driving off any context.
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Thought Leaders in E-Commerce: Bob Dufour, President of Fusion (Part 6)

Bob Dufour: Another one that we see a lot is the ability to easily connect partners. I think there’s a technical integration opportunity out there for showing how people can connect. Those are all tied together. Having the products in this ancillary space, having the product suppliers, being digitally enabled, and having technical connections that can be universally plugged in or unplugged. That will make all those transactions work a little bit easier.

There are two other things that I think are opportunities. One of them is cross-device. >>>

Thought Leaders in E-Commerce: Bob Dufour, President of Fusion (Part 5)

Sramana Mitra: In terms of trends, is there anything else that you want to share?

Bob Dufour: I think for me, it’s digitalization driving price transparency accelerated by these aggregators, and the importance of having ancillary strategy.

Sramana Mitra: What are some of the open opportunities in the general space that you would encourage entrepreneurs who are starting out to look at?

Bob Dufour: There’s a corollary to this. Think iTunes. So many of these ancillary products that people are trying to sell are analog products that they’re trying to digitize and sell in a digital environment. Our experience is that there’s this huge need for a lot of micro products. You don’t need to maybe sell this highly bundled ancillary product. Maybe, there’s just a component of it. Let me take an example of a travel insurance product that we’re familiar with. Maybe you don’t need to sell this bundled product. Maybe what somebody wants is just protection for their >>>

Thought Leaders in E-Commerce: Bob Dufour, President of Fusion (Part 4)

Sramana Mitra: Very interesting. The insight that is interesting here is the core versus non-core products and optimizing margins selling non-core products while people are shopping on the core.

Bob Dufour: One of the things that I would say, as far as my overall position goes, would be if you’re getting into digital marketing and if you don’t have an ancillary strategy figured out, I think you’re screwed. You’re just going to watch your margins get eroded and you don’t have anything to move them back up. People who are really good at this are going to make more money. If I’m selling a Sony television and I know that Best Buy and Amazon are out there, I know that I can only get away with offering that product at a certain price. What if I’m really good at selling warranties or financing? Both of those bring in additional profits to me. There are a couple of things I can do with that. One is, I can just take it in as profit. I’ll really look good at Wall Street for a while. The other thing I can do is, I can discount my price even more. Now, I look even better. I’m cutting the price but I’m still going to be as profitable as the other one. It gives me a lot of flexibility when I’m in a digital selling mode by having these profits that come from being really good at selling these ancillary or supplemental products. >>>