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Bootstrapping Using Services to $15 Million in Venture Capital: Gravitant CEO Mohammed Farooq (Part 5)

Sramana: Let’s talk about your financing strategy. You raised a round in 2012 and another in 2013. How many customers did you have by the time you raised your first round?

Mohammed Farooq: We had three customers. Texas was our largest customer because they had six different agencies, so it’s almost like we had six separate customers there. We also had NJVC and a company out in Washington D.C. that had just signed on.

Sramana: Who did you raise money from?

Mohammed Farooq: We raised money from S3 Ventures here in Texas. >>>

From $3 a Day to Successful Entrepreneur: Tomas Gorny, CEO of Nextiva (Part 5)

Sramana Mitra: You had $6,000 in the bank and you used your American Express credit line and started a web hosting company. How did that work? Can you talk a bit more about the early journey of that company?

Tomas Gorny: I bought two servers. I was very technically oriented, so I installed them and had a technical guy help me a little bit. I had a vision. Let me take you back a little to explain it. When I first visited the United States, it was just for two months. I didn’t speak any English. It was the 4^th of July and I saw from my hotel room this ‘two for one’ shoes. From a European mentality, that’s actually very awkward. I am now used to that, having been here in America. >>>

Bootstrapping Using Services to $15 Million in Venture Capital: Gravitant CEO Mohammed Farooq (Part 4)

Sramana: You talked about the work that you did for the State of Texas. What work did you do for IBM?

Mohammed Farooq: We took the same model and replicated that with IBM for the State of Indiana. Indiana wanted the same thing and IBM needed help. IBM bought our services and the product that we had built at that time for performance management and governance.

Sramana: Essentially your projects were all governance related projects. You did one directly with the State of Texas and another with Indiana through IBM.

Mohammed Farooq: Yes. We did a lot of governance as well as IT operations, business operations, and a lot of business process outsourcing for contact centers. As a CIO/CTO, you need to understand that jobs have been changing for a long time. People think they work only in technology and finance. In reality, you are looking at what problems we are solving concerning the business and you are planning out transformations. I was intricately involved with business technology transformation and governance. You are correct in pointing out that all of our customers at that time were government customers. >>>

From $3 a Day to Successful Entrepreneur: Tomas Gorny, CEO of Nextiva (Part 4)

Tomas Gorny: We never went bankrupt. We paid off all the creditors. We filed what is called ABC – assignment for the benefit of creditors. After we filed that, we dissolved the company. In 2001, I was left with no money and was in pretty much the same situation when I came to America.

Sramana Mitra: But you still had the house and the car?

Tomas Gorny: Yes, the car was just getting me from A to B really. There wasn’t much value in that anymore. I had to pay mortgage for the house. >>>

Bootstrapping Using Services to $15 Million in Venture Capital: Gravitant CEO Mohammed Farooq (Part 3)

Sramana: What did you do next?

Mohammed Farooq: I decided to move back to Texas. My friends from the State of Texas Governor’s Office had called me back. They wanted to transform Texas technology due to health laws, so I took over as the CTO of Health and Human Services. I drove state wide transformations and for the next seven years, worked as the CTO running a $6 billion IT operation. It transformed the state into a shared services model.

I left in 2007 and they called me back in 2010 and told me that it was not working. They were locked into one sole-source provider IBM. Their costs were going up and they had no way out. I proposed a new model to them which was to treat IT as a supply chain. The cloud lets you do that. Can you route your demand to any provider in the supply chain? You can do that in real time. My friend thought I was nuts. I knew that the cloud had given us the opportunity to do that, but there was no technology in place to be the router or broker. You need to put a lot of business brokering in as well. >>>

From $3 a Day to Successful Entrepreneur: Tomas Gorny, CEO of Nextiva (Part 3)

Tomas Gorny: As a result, while I was building my tech business in the web hosting industry, I was doing whatever it takes – valet car parking, carpet cleaning – to survive. For two years, I lived on $3 a day in terms of food allowance. I even remember days when I didn’t have any money. I never pitied myself though. I was living in a place where I wanted to live. When I woke up, it was always sunny. I was building something. Eventually, the business started kicking in a little bit more. Two years later, we sold the business for a substantial amount. I had just turned 22 and became a multi-millionaire with the sale of the business. I also own stocks in the company that bought our business.

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Bootstrapping Using Services to $15 Million in Venture Capital: Gravitant CEO Mohammed Farooq (Part 2)

Sramana: What was your next career step after your successful project for the State of Texas?

Mohammed Farooq: In 1999, a guy called Manoj Saxena started a company in Austin and I became his first employee. I joined them on a journey of entrepreneurship. When I was working for the State of Texas in the Governor’s office, I had the option of joining the presidential campaign and move forward in government. The project I had been working was wildly successful and I had the chance to take on other projects. Instead, I chose to join Manoj as he built a new company. >>>

From $3 a Day to Successful Entrepreneur: Tomas Gorny, CEO of Nextiva (Part 2)

Tomas Gorny: When I was living in Germany, I was 17 years old and had learned the language. I decided that the PC industry is growing, so I started a PC distribution company. We were buying different PC components from vendors, assembling them to computers, and then selling them to businesses and individuals. What I started noticing was that people were discriminating against me because of my Eastern European accent. On top of it, I was very young. It would have been unheard of for somebody of 16 years of age to go into business. You had to be 28 to 30 to be credible and to be considered legitimate. I wasn’t just young but I was perceived as this stupid and young Polish guy. But what I also noticed was, because of that, people were significantly looser with their words around me. >>>