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Bootstrapping a Big Data Company Using Services: DataSong CEO John Wallace (Part 2)

Sramana Mitra: You were kind of an applications engineer?

John Wallace: It was a great opportunity.

Sramana Mitra: That brings us to 2003?

John Wallace: Yes. In 2003, I started a firm doing analytic consulting. I thought that I would be more impartial to what software we use to solve a problem and be more focused on the problem than selling a particular license. I think that the growth that we have as a service firm is tied to that era of computing where in order to practice our trade, we needed to follow and work with very large corporations with major investments in warehousing, technology, licenses, and servers. >>>

Student Entrepreneur to $10M+ in Revenue Without Dropping Out: Course Hero CEO Andrew Grauer (Part 5)

Sramana Mitra: From the end user’s perspective, is the end user using your platform largely in a web self-service mode? What percentage of that user uses self-service versus a tutor assisted usage?

Andrew Grauer: It’s probably going to be something like 70% to 80% self-service.

Sramana Mitra: I’m trying to gauge how big the tutoring phenomenon is in this community versus people just using the materials and teaching themselves.

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Ultra-light Startup with $6 Million Revenue: Car Part Kings CEO Michael Dash (Part 5)

Sramana: Are your distributors well equipped to handle the fulfillment directly to consumers?

Michael Dash: Yes, they have large warehouses that stock these auto part inventories. Those warehouses are set up as shipment and fulfillment warehouses. When somebody orders a part from me, I electronically transmit that to them. They pick that part and put it in my box. They put my tape around it and my information on the box and then ship the box to the customer. They charge me for that service.

Sramana: Can you talk about the economics of this business? Obviously, the wholesalers do not have the expertise to do the marketing and selling. Who takes what in this process?

Michael Dash: If we sell a part, then we obviously have a cost on the part and a cost to ship that part. We mark up the part a percentage based on what we think the market will allow. We set our pricing based on what our competitors charge, what our baseline margin is and what our customer acquisition cost is. We mark up our product based on all of those factors. >>>

Bootstrapping a Big Data Company Using Services: DataSong CEO John Wallace (Part 1)

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

We maintain that one of the best ways to identify complex problems worth solving inside enterprises is by offering services to them, thereby gaining exposure to the domain. Datasong is yet another case in point. Related reading: Bootstrapping Using Services.

Sramana Mitra: Let’s start at the beginning. Where are you from? What kind of a backstory leads up to the entrepreneurial story?

John Wallace: I grew up in the South from a pretty modest background.

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Student Entrepreneur to $10M+ in Revenue Without Dropping Out: Course Hero CEO Andrew Grauer (Part 4)

Sramana Mitra: You were doing college level courses?

Andrew Grauer: Yes, we focused on US colleges. Then, we expanded internationally as well and now we’re just starting to go into high school.

Sramana Mitra: Within those colleges, was there any bias in terms of courses?

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Ultra-light Startup with $6 Million Revenue: Car Part Kings CEO Michael Dash (Part 4)

Sramana: Let’s double down on the evolution of your business. Can you talk more about the progression of the business chronologically? When did you actually start the business?

Michael Dash: We started it in September of 2011. We had sold our equity in our previous company in July of 2011. We started brainstorming our next step and we both had a good understanding of what it took to run a good e-commerce company. We also knew that there was a very low barrier to entry in e-commerce.

Since we were self-funding the business, we got a very small space in Brooklyn. Our very first step was to find distributors who would work with us and provide us the data we were looking for. We did not actually start selling products until February of 2012. We did the initial coding ourselves. Between development and outreach there was a good five months staging.

Sramana: Since you were selling on the marketplaces what development did you have to do during those 5 months in terms of development and coding?

Michael Dash: There was a tremendous amount of database work. Because we are selling auto parts and precise fit is required, there was a tremendous amount of database structure to make sure the parts were listed correctly. We also had to make sure the data behind the parts, such as descriptions, videos, and pictures, was correct. >>>

Student Entrepreneur to $10M+ in Revenue Without Dropping Out: Course Hero CEO Andrew Grauer (Part 3)

Sramana Mitra: That’s actually great. We love these stories of student entrepreneurs who didn’t drop out. Going back to the subscription model, how did the revenue ramp?

Andrew Grauer: It ramped really well in terms of growth rate but we were starting on a really small figure. I don’t remember the specifics. I do know that in 2010 we eventually got to a million dollars in sales. Then, we doubled every year after that. That was about $2.5 million in 2011, $5 million in 2012 and over $10 million last year. We hope to do between $15 to $20 million this year.

Sramana Mitra: Let’s get to a bit more granular detail about how you built that revenue up. Talk to me about the highlights of customer acquisition and conversion rates during the early times. It sounds like the advertising revenue was a non-event. >>>

Ultra-light Startup with $6 Million Revenue: Car Part Kings CEO Michael Dash (Part 3)

Sramana: What was your team building process like?

Michael Dash: We started very small with just David and I and then slowly started to add additional employees. We started with a database and network engineer. Then we hired a couple of PHP engineers and Magento developers. We also hired some designers and customer service members. Within two years, we had reached $6 million in revenue and are projecting $10 million in revenue next year. >>>