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Bootstrapping to $27 Million from Arizona: Jeremy Young, CEO of Tanga (Part 5)

Jeremy Young: The second company was called Uberplay. That was a company that was going to take the best games out of Europe and trying to get the license for English-speaking markets, produce these games in China or Europe, and distribute them in the United States. We went over there and signed a lot of contracts. We produced 50 different SKUs. Some of these games were in Game of the Year in Germany. It sold millions of copies over there and we had the rights for the American market.

I went to Toy Fair and tried to get distribution. When you go to a Walmart and say, “This game has sold two million copies in the past year in Germany. We want you to put it on your shelf.” They’ll say, “That’s great, but you’re going to bring in 5,000 copies of this game. It’s going to sell for 10% through in one week or you’re going to take them all back. We want a million dollars worth of advertising expense to put towards this.”

I was being a little naive thinking that I had this great product that would resonate with everyone because it resonated well with Europe. With our distribution channels, they were not open for new products. You had to pay to play. I decided to try through online and social media. We were growing and it was selling, but it was super hard to make any money. >>>

Building a High Growth SaaS Company from Los Angeles: Nick Hedges, CEO of Velocify (Part 6)

Sramana Mitra: What triggered the telephony piece? What is the telephony functionality from a use case point of view?

Nick Hedges: It does a large number of things. One of the things is that it allows you to work very efficiently through an optimized list. If you look at what a typical salesperson does in a normal CRM, they go to a lead or an opportunity, read the information, decide whether they’re gong to call it, and then they make the call. After the call finishes, they need to figure out who they’re going to call next.

With our system, we have the prioritised list and you can just move from one lead to the next quickly and efficiently, always knowing that whoever you’re going to be calling next is the opportunity that is the highest priority to call. The other thing that it does is that it solves the number one issue in inbound sales. When you generate leads, whether that comes through your marketing automation system, straight from your website, or from third parties, the number one thing that determines whether you’re going to convert that lead is how quickly you call it. There’s just a very high correlation between the two. >>>

Bootstrapping to $27 Million from Arizona: Jeremy Young, CEO of Tanga (Part 4)

Sramana Mitra: Talk to me about your involvement in that company and how long you were involved in that company.

Jeremy Young: I was involved for probably a couple of years. I ended up selling my interest back to them.

Sramana Mitra: In what capacity?

Jeremy Young: I came to them with the idea. They did the programming. I did the marketing. We had terms of service not to allow certain types of websites. Everyday, I’d go in there and find certain websites that were breaking the rules. It was just the three of us. We had our hands in everything at that time.

Sramana Mitra: This brings us up to what? 2001 to 2011 timeframe? >>>

Building a High Growth SaaS Company from Los Angeles: Nick Hedges, CEO of Velocify (Part 5)

Sramana Mitra: There was nothing specific to the mortgage industry? It was pretty much a horizontal product that you apply to the mortgage industry and when you decided to diversify after the financial crisis, it translated reasonably easily into these other verticals?

Nick Hedges: Exactly right.

Sramana Mitra: You’re back to $4 million in revenue and you were still VP of Business Development at this point?

Nick Hedges: Correct. Actually another thing happened within the first nine months. The company hired a new CEO. The existing CEO Founder wanted to narrow his focus just on the product. The investors brought in a new CEO and that CEO moved some people around. For me what that meant was he asked me to not only run business development, but also the sales organization. That happened in October 2008 for me. That was actually a phenomenal opportunity >>>

Bootstrapping to $27 Million from Arizona: Jeremy Young, CEO of Tanga (Part 3)

Sramana Mitra: What was the premise of that partnership?

Jeremy Young: Windows95.com was owned by Steve Jenkins. He was my partner in Virtual Servers. He pushed traffic from Windows95 to my company. He basically had advertisements for the web hosting product on his website.

Sramana Mitra: How big did the company grow to be?

Jeremy Young: We were at about $11 million in sales at that time.

Sramana Mitra: Was it all organic?

Jeremy Young: All organic. >>>

Building a High Growth SaaS Company from Los Angeles: Nick Hedges, CEO of Velocify (Part 4)

Sramana Mitra: What happens next?

Nick Hedges: I joined the company because I was really interested in the data that they were collecting and the flexibility of the platform that they had built. Essentially, they were collecting closed-loop data so these are data from the point that the lead was created to the point that they converted into customers, and every interaction that happened in between. I said, “That’s a fascinating and relatively unique dataset that we can use to really help sales teams be much more effective. In my interview, I said, “One thing that you should think about is if you mined your data, could you tell the sales team what would be the right number of calls to make and what the spacing of those calls were? If you can, then I suspect that you’re going to be able to help sales teams significantly increase their results.”

At that time, we had about five million leads with all of their outcomes. I thought there was a huge opportunity there that was relatively untapped. I also saw that the platform was flexible. They hadn’t made any hard decisions. There was nothing really specific about the mortgage industry that they had built into what >>>

Bootstrapping to $27 Million from Arizona: Jeremy Young, CEO of Tanga (Part 2)

Jeremy Young: I was teaching HTML at the university at that time. There was a guy in my class, Steve Jenkins, who registered the domain name windows95.com before Microsoft was even thinking about the Internet. If you remember, Windows didn’t even have the web browser in their launch edition of Windows 95. He was building a website that was getting to be pretty popular. It was all free shareware and downloads. It was one of the pretty popular sites on the Internet.

He was in my HTML class just to get half a credit to get his MBA. We became really good friends. My idea was, “Why don’t I start a web hosting company?” I can talk to the current people that I buy web hosting from, get them to create a white-labelled reseller solution for me where customers would have no idea that they were actually purchasing from a different company. Then Steve could provide the marketing to push traffic from his windows95.com website over to my company. >>>

Building a High Growth SaaS Company from Los Angeles: Nick Hedges, CEO of Velocify (Part 3)

Nick Hedges: The company was founded by Jeff Solomon who was running a software development company in Los Angeles. He had several clients who were in the mortgage industry, and they were asking him for a system that allowed them to be more efficient on how they manage the leads that they were purchasing from companies. He built three or four of these systems. He got together with an individual called Charles Chase who had just graduated from business school. He said, “There’s an opportunity here to build this as  a SaaS.”

In other words, you can configure it to your business needs but the core is fundamentally the same. They set out to do that. Before business school, Charles had worked at, what is now, Cornerstone OnDemand. He recruited another founder Tony Christopoulos who was the Chief Architect at Cornerstone OnDemand. He became the founding CTO of Leads360. >>>