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Building a High Growth SaaS Company from Los Angeles: Nick Hedges, CEO of Velocify (Part 2)

Sramana Mitra: How did eteatrade go?

Nick Hedges: It went well. We ended up transacting about $2 million a month. The net margins were pretty small. Ultimately, we sold it into one of Nick’s businesses that ran his tea and coffee estates. I didn’t want to be a part of a bigger entity, so I left. I did VC for a short period of time doing small investments in southeast of England for a company called Southeast Growth Fund. That was really a tremendous experience for me. I had the entrepreneurial experience and had some success at doing that. I also got to see a large number of very early stage companies.

We were investing £250,000 to £1 million in businesses that were trying to get off the ground. We were investing quickly in a lot of companies. I got to see a very big pipeline. That was super interesting to me. While I was working for that company, I also applied to business school. I got a place at Harvard Business School and got a scholarship. I decided that I was going to do that for a couple of years, and that’s how I came over to the US. >>>

Bootstrapping a Niche E-Commerce Business to Exit: Dara Greaney, CEO of BuyAutoParts.com (Part 6)

Sramana Mitra: At the end of 2015, where did you finish in terms of revenue level and in terms of other business metrics?

Dara Greaney: Last year, we did $54 million. That was 15% growth. We’ve been profitable every year. We shipped a record 220,000 shipments last year. I think we sold about 22,000 different SKUs last year. One thing to note was that in 2013, we did a private equity transaction. We did do an exit to private equity.

Sramana Mitra: You sold the whole company to private equity?

Dara Greaney: The majority of the company got sold to private equity. We kept some stakes in the business. I had a small piece that I rolled over with the new team. >>>

Building a High Growth SaaS Company from Los Angeles: Nick Hedges, CEO of Velocify (Part 1)

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

This story illustrates a couple of interesting strategic moves that have resulted in growth acceleration for Velocify. These kinds of strategic moves are critical to the evolution of a business.

Sramana Mitra: Let’s go back to the very beginning of your story. Where are you from? Where were you born and raised? What’s the back story of Velocify?

Nick Hedges: I was born in England where I lived for 30 years. I would say that I was expected to be a banker when I grew up. My father was a successful banker and his father was also a banker. I really disappointed my parents by going into the advertising industry after college. I went to Manchester University and graduated Valedictorian from school. I decided that I wanted to do something more creative than banking. I went into advertising and worked for Ogilvy & Mather for a couple of years. I enjoyed that but found it a bit limiting. >>>

Bootstrapping a Niche E-Commerce Business to Exit: Dara Greaney, CEO of BuyAutoParts.com (Part 5)

Sramana Mitra: How many people did you have for executing this $18 million business in 2010?

Dara Greaney: I have to go back and pull the numbers, but it wasn’t a big staff. We were keeping it pretty lean. We probably had about 30 people and about 5 or 10 on the phone doing order processing.

Sramana Mitra: You continued to keep your website development in India?

Dara Greaney: Website development stayed in India and we just kept adding new features and functionalities. Automotive parts are very difficult to catalog because you have to have the year, make, and models attributes. That was a crazy period. We had never sourced products from overseas, so we went to China and did this relationship-building. As we got bigger, we had the premium brand name. That was all new for us. None of that had been thought of beforehand. We were really opportunistic. We just looked for opportunities and just jumped on them. The research was on the back of a napkin. It really worked well for us in that period. >>>

Bootstrapping to $100 Million Using Services from The Netherlands: Pierre and Fred Guelen, Planon Software (Part 6)

Sramana Mitra: Now what? You’re in 2016. How big is the company revenue-wise and what do yo want to do with it? Do you want to go public? Do you want to go public in the US market?

Fred Guelen: We definitely first want to secure further growth for the next three to five years. We see great opportunity worldwide, especially in the American market. We believe that we can achieve a dominant leading position in the US market.

The Asian market is growing really fast right now. There are still huge markets out there to conquer and to enter. For example, Korea, China, and Japan. We are still enthusiastic and we love what we are doing. It would be a great outcome to have an IPO five years from now after becoming the clear world leader in this area. >>>

Bootstrapping a Niche E-Commerce Business to Exit: Dara Greaney, CEO of BuyAutoParts.com (Part 4)

Sramana Mitra: What was the average deal size? These are pretty high-ticket items, yes?

Dara Greaney: Yes, they’re pretty high-ticket items. We are looking at the $350 to $450 range, which was good because it was so cumbersome for us to get them out the door. Every order has five touch points, but we didn’t have the system in place back then.

Sramana Mitra: At what point did you start bringing in these systems and how did that proceed?

Dara Greaney: We had this in-house system that we kept building on and evolving on. Piece by piece, we would develop. We were using an offshore Indian team to develop the website for us. We had an internal person who was building some of these internal systems. They were constantly working to help evolve our catalog and just every month, do something to make things a little bit easier. >>>

Bootstrapping to $100 Million Using Services from The Netherlands: Pierre and Fred Guelen, Planon Software (Part 5)

Sramana Mitra: Where did you get the money to invest?

Fred Guelen: That’s always the big secret, isn’t it? I had a very successful law practice and I made a lot of money as a lawyer. I was able to largely finance that with my own equity, and I also took a loan.

Pierre Guelen: He built his law firm from 2 persons to 150 persons. It was a very successful law firm in the Netherlands. What I did in Planon, he did in the law firm. He created a lot of value there.

Sramana Mitra: Did you sell the law firm or do you still have the law firm while you’re now working with Planon? >>>

Bootstrapping to $100 Million Using Services from The Netherlands: Pierre and Fred Guelen, Planon Software (Part 4)

Sramana Mitra: What did that do to your growth? Between 2000 and 2010, how did the company grow?

Pierre Guelen: We’ve always had a steady pace of growth of an average of 20% a year.

Sramana Mitra: Let’s go to 2010. Are we talking about just one product in the cloud architecture in 2010?

Pierre Guelen: No. In 2010, we had one standard product that’s used by every customer, but it wasn’t a real cloud product at that moment. At that moment, 80% of our customers were still on-premise. Only in the last few years did we see a shift towards our cloud solution. We have an enterprise system. That means that this is a very traditional market. Most organisations like hospitals and governments want to use software on-premise because of security reasons. This has just shifted in the past three years.

Sramana Mitra: What year did you finish the cloud product? What year did the software business become a cloud business? >>>