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Peruvian Entrepreneur, Bootstrapping to $200 Million: Belisario Rosas, CEO of WEI (Part 5)

Sramana Mitra: You have chosen to grow it to a substantial level with profits. What do you want to do with this company? Is it something you’re looking to sell? Do you want to continue running it forever?

Belisario Rosas: Continue it. We run the company like a family business. We want to be one of the best places to work at. We’re very employee-friendly. We should be applying for those best places to work for, but we don’t want to have a just a plaque. We want to live it. I feel that we live it. Just trying to fill it with more people is not our goal. We want to keep it under control. I would never want to be in a company where I do not know every single one of my employees.

Sramana Mitra: How big is the company now in terms of employee size?

Belisario Rosas: We’re about 100.

Sramana Mitra: Are they all in Montreal? >>>

Building a Capital Marketplace for Mid-Market Businesses: Axial CEO Peter Lehrman (Part 5)

Sramana Mitra: You were providing the management tools on the transaction but you were also making those connections.

Peter Lehrman: Yes. At the core of Axial is a search engine that looks at the data related to the company that is raising capital or is for sale. It looks at all the data that is uploaded by either the entrepreneur or by the entrepreneur’s investment banker or business broker. Then it renders a filtered list of recommended private equity buyers, lenders, and corporate buyers. It creates a specialized curated list of recommendations based on all the data we have from different sources of capital. The entrepreneur who is deciding to raise capital or the investment banker who is acting on behalf of the entrepreneur can then select which of those people or organizations they want to reach out to and connect with. That entire portion of the process happens on Axial. >>>

Bootstrap First, Raise Money Later: Wrike CEO Andrew Filev (Part 5)

Sramana Mitra: I understand that you constantly test and experiment but there must have been some kind of institutional truths that were emerging in terms of your pricing and business model?

Andrew Filev: One of the big things that we found is this switch to packages in the SMB digital space. We tested and we’re like, “Wow! This is great!” Another interesting observation that we learned pretty quickly is to optimize for the right things. One example is credit card trials. Back in those days, most companies required credit card trials. You could remove that, which would absolutely improve their conversion from being visitor. But then people are less committed. Fewer of them convert from trial to paid account.

When you’re testing like that, you have to optimize throughout the conversion. It’s not just the first step. If you’re just looking at the first step, you’re being short-sighted. There’s a similar example that runs much deeper in how the market operates. If you remember online marketing, the whole dot-com bubble burst around their revenue model of advertising, which was CPM model. The big revolution that Google came up with was cost per click. Everybody was excited. >>>

Peruvian Entrepreneur, Bootstrapping to $200 Million: Belisario Rosas, CEO of WEI (Part 4)

Sramana Mitra: Did you have that tendency of trying to do it all before this change happened?

Belisario Rosas: Very much. I was buying. I was selling. I was doing everything.

Sramana Mitra: You were running a substantial revenue company but you did not have any executive team?

Belisario Rosas: That is correct.

Sramana Mitra: Interesting. The next thing that you did was to introduce a layer of executive teams.

Belisario Rosas: That is correct. I was also delegating. Like I said earlier, I was pretty much into micro-managing. I was learning how to make others do it and concentrating on more of a strategic view of where we wanted to take the company and how we wanted to grow. I would say that was the >>>

Building a Capital Marketplace for Mid-Market Businesses: Axial CEO Peter Lehrman (Part 4)

Sramana Mitra: What kind of traction did you see? With that industrial manufacturing concentration, what kind of traction did you see in the beginning?

Peter Lehrman: Very quickly, we had customers willing to pay us a couple of hundred dollars a month on the demand side. The private equity community was ready to pay – not particularly a high price – for a service offering that would help them find investment opportunities more easily and more quickly. We saw that traction in the first couple of months. On the broker side of the platform, in the first month, we probably had 20 or 30 transactions that brokers had uploaded to the platform and began to make available.

We weren’t the first business to begin developing an online platform for brokers to sell companies. We think we’re best-suited for middle-market businesses. There were a lot of listing sites that were predecessors to Axial. Those listing sites tend to work very well for local businesses like >>>

Bootstrap First, Raise Money Later: Wrike CEO Andrew Filev (Part 4)

Sramana Mitra: What was the first year that you were actually selling this product? Was it 2007?

Andrew Filev: Yes. If I remember correctly, we launched the product in June 2007. We had a 30-day trial. The first payment came in 30 days later.

Sramana Mitra: At the end of 2007, how many customers did you have? What did you learn about the business model and the pricing model? What was resonating with your customers?

Andrew Filev: I honestly do not remember. We’ve developed 10,000 paying organizations right now and we’re growing exponentially. This last year, we actually did 2.5x. I don’t remember the exact numbers off the hat. >>>

Peruvian Entrepreneur, Bootstrapping to $200 Million: Belisario Rosas, CEO of WEI (Part 3)

Sramana Mitra: Let me actually probe each of those points a bit. Did you, at this point, become an e-commerce site? Were people ordering online?

Belisario Rosas: No. We barely, to this date, do any type of e-commerce. All of it is solution-based and face-to-face selling.

Sramana Mitra: Talk to me about solution service infrastructure that you put in place that allowed you to do that level of business in the 1998 time frame.

Belisario Rosas: It was more of adding value to the products we were selling. At that time, we were one of the only few that could power-convert products. We specialize in foreign voltage computer parts. We set up a testing facility so that we were able to test and convert certain products to run under 220 V, which was European power. We specialized in that. There were only three or four capable facilities in the US >>>

Building a Capital Marketplace for Mid-Market Businesses: Axial CEO Peter Lehrman (Part 3)

Sramana Mitra: How much are we talking? What kind of capital base did you start with?

Peter Lehrman: About a million.

Sramana Mitra: How did you bring this two-sided marketplace together? There’s always a chicken and egg in marketplaces. What was your strategy to bridge that?

Peter Lehrman: We built two products and launched them essentially at the same time. The two products were a tool for sellers and buyers of companies to articulate the profile of companies that they were looking to buy. We built two sides of the network concurrently from a product perspective and released them concurrently to the two markets. We picked very specific markets on the sell side. >>>