Scaling a SaaS Business to 11,000 Customers: Booker.com CEO Josh McCarter (Part 1)

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

In 2010, SaaS investors were less rigorous than they are today about unit economics. Josh managed to raise a $15 million Series A and acquired a significant runway to figure out the metrics of his SMB-focused SaaS business. Read more about his journey.

Sramana Mitra: Let’s go to the very beginning of your journey. Where are you from? Where were you born, raised, and in what kind of background?

Josh McCarter: I was born in Sacramento, California. I lived there till I was about 12. Then we moved down to San Diego. My mom’s family was an immigrant family from Greece and has a bunch of entrepreneurs. My grandfather and uncle on that side were very >>>

Building a Mobile Security Company in Silicon Valley: Domingo Guerra, Co-Founder and President of Appthority (Part 6)

Sramana Mitra: At what point did you make that switch from going indirect to direct?

Domingo Guerra: I think it was around 2013 when we were in front of a lot more customers. We started realizing that it is a new space that’s changing very quickly. It’s difficult to train a partner to sell something that’s changing very quickly, because you’re not getting a lot of the feedback as quickly as you wanted. It’s almost like the telephone game where the customer tells the partner and then the partner tries to interpret that and tell you.

There’s a lot of details that get lost along the way. We wanted to be closer to the customer to capture the feedback and also be able to move faster into the development and customer requirement. That took us into being more direct. It also allowed us to have better visibility into upcoming requirements and better pattern recognition across the different customers. >>>

Building a Mobile Security Company in Silicon Valley: Domingo Guerra, Co-Founder and President of Appthority (Part 5)

Sramana Mitra: By the time you got this term sheet, how many customers did you have?

Domingo Guerra: We had about six or seven beta customers, but they weren’t paying yet. A lot of times, it’s like a chicken-and-egg thing. They want to go with you but they want you to get funding because they’re afraid to invest and deploy your technology fully and not have you around. The VCs would like to see revenue to help them facilitate that investment.

Luckily, Ray and Steve are familiar with the space. They knew that if these large customers are using your product, they’re not going to waste their time with a small startup unless you’re solving a problem that they have difficulty finding a bigger technology provider to solve. That means you’re on to something. Even though they were beta customers and not paying customers, they saw that it had traction and validation. They were big enough brands, and it made a difference. >>>

Building a Mobile Security Company in Silicon Valley: Domingo Guerra, Co-Founder and President of Appthority (Part 4)

Sramana Mitra: Talk to us a little bit about your fundraising process? What proof points did you go to raise money with and whom did you raise money from? What was the rational for raising money and what were the circumstances in which you raised money?

Domingo Guerra: We were pretty naive about fundraising. We thought it was going to be very easy. My co-founders and I were all first-time entrepreneurs. In general, you only hear the good stories but no one knows how difficult it actually is. We started fundraising almost by accident. When we didn’t win the grant, we decided to bootstrap on our own savings.

We weren’t paying ourselves. We were just paying for everything with our credit cards and then just living off of our savings. Then in late 2011, we got a call from a VC that wanted to meet with us because they heard about what we >>>

Building a Mobile Security Company in Silicon Valley: Domingo Guerra, Co-Founder and President of Appthority (Part 3)

Sramana Mitra: Who was the first customer that adopted your solution?

Domingo Guerra: We had a lot of initial beta customers. Automotive companies were doing manual testing of apps, and we were helping them automate that. The first paying customer was one of the largest ad networks. When you play a game, for example, you might see a popup suggesting you to download another game. They wanted to make sure that those games didn’t have malware. It was before we had a user interface.

Now we serve the enterprise directly and we have a portal where they can go to. At that time, we only had our engines. It was very rudimentary. It was basically API access where we would grant the customer a way for them to upload or submit applications. Then our engines would review them and reply with a score >>>

Building a Mobile Security Company in Silicon Valley: Domingo Guerra, Co-Founder and President of Appthority (Part 2)

Domingo Guerra: During my MBA, I decided to focus on entrepreneurship. Santa Clara has a very flexible program and you get to pick a lot of the classes and core competencies that you want to focus on. I decided to shadow a lot of the professors there that had entrepreneurship experience. In the last semester of the program, I got to do a market research project for an entrepreneurship class where you basically write a business plan. That’s when I started evaluating the mobility space inside the enterprise. It was something I was passionate about.

We had all transitioned from the Blackberrys that were assigned to us to the iPhone. However, IT wouldn’t support it. Having a technical background, we figured out how to make it work on our own. It wasn’t necessarily the most secure way for the enterprise if they weren’t involved in that process. A good friend of mine, Kevin Watkins, was at McAfee. I started sharing ideas about mobility and explored starting a company. He was still pretty happy at McAfee, so he didn’t want to leave. >>>

Building a Mobile Security Company in Silicon Valley: Domingo Guerra, Co-Founder and President of Appthority (Part 1)

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

Domingo came into the market at a time when his original value proposition to enterprises wasn’t that urgent. Over time, however, the mobile security challenge has grown into a critical issue, and now the company is thriving.

Sramana Mitra: Let’s start at the very beginning of your personal journey. Where are you from? Where were you born, raised, and in what kind of background?

Domingo Guerra: I’m originally from Monterey, Mexico. I didn’t move to the US until I was 18. Ever since I was a kid, I always wanted to be an entrepreneur. Monterey is very well-known for some of the largest companies in Mexico. A lot of folks wanted to be soccer players when they grew up, but I wasn’t very good at sports. I wanted to focus on academics and try to do well. I remember a talk when I was a kid where they said, “You need a lot of luck to do well in >>>

Bootstrapping Using Services: Taylor Tyng, CEO of Wiredrive (Part 6)

Sramana Mitra: With the way you’re running the business today, have you identified levers where if you just throw money at it, you’re going to grow orders of magnitude faster?

Taylor Tyng: Yes. It’s actually been one of the most interesting things. The focus on the type of product that we were building was a little bit too broad. We had customers who were paying $99 and customers paying over $10,000 a month. By focusing our choices on segmentation of customer base, which were lower acquisition cost, and in turn created longer lifetime value, a lot of those trends within that segmentation led us to a focus that just eliminated low-value activities across the business.

Our ARPA has gone up on every single plan that we have. Even making the simple choice of focusing on specific areas of improvement has had enormous effect, which has shaped our roadmap. That’s just on the operations side of it. The other side that’s really noisy but is starting to pay dividends for us is, we are on the managing aspects of 360 >>>