Three messages before we get started. First are you a user of 37signals web apps? Then you’ll want to know about SignalKit.com, it expands a utility of all those business tools you’re already using. Signalkit.com very plain and simple, they make your 37signals tools more powerful. Do you ever wish you could see your Basecamp to do’s across multiple accounts all on one page? Or would you like to get better notifications of your Campfire chat rooms? Or maybe use Campfire as a way to add live chat support to your website? Well, check out some of the products being created by SignalKit, a suite of tools designed specifically for 37signals users like you. Let me give you that webpage again. SignalKit.com.
Next, after you sponsored hundreds of Mixergy interviews, if I asked you who is Scott Edward Walker, what would you say? The answer of course is the lawyer that specializes in helping startup founders like you. I’ve known Scott for years and have privately recommended him whenever a founder asked me for a lawyer. Scott Edward Walker of Walker Corporate Law.
Finally, if you need a phone number that gives you unlimited extensions, who do you turn to? Grasshopper.com. If you have or if you need to have your voicemail transcribed, who do you turn to? Grasshopper.com. If you need a toll-free number, who do you turn to? Grasshopper.com. It’s the virtual phone system that entrepreneurs love.
Here’s the program.
Andrew: Hey everyone. My name is Andrew Warner. I am the founder of Mixergy.com, home of the ambition upstart and the place you come for a mix of success stories. Entrepreneurs who tell the stories behind their businesses. So how do you scale your business in a down economy? Joining me today is Bill Loumpouridis. He is the founder of EDL Consulting, which helps clients sell more effectively on the Web. He launched a company in the dark days, after the dot com bubble burst, and I invited him here to find out how he’s grown the business over the past ten years. EDL recently launched CloudCraze the first and only enterprise class e-commerce product that’s native on Force.com. I’m going to ask him why that’s significant, and I’ll ask him about the launch and how he’s grown that business. Bill, welcome to Mixergy.
Bill: Thanks Andrew. It’s a pleasure to be here.
Andrew: I’m ripping through that intro. I should have taken a breath here and there and gone a little bit slower. It’s a lot of facts to cover in there. Maybe I should have reduced the facts, and had you say them instead of forcing them in the intro.
Bill: You know, it feels like a blur to me as well. Ten years can go by quickly.
Andrew: I’ve got to just pause, and let some of the message sink in. Anyway, revenues for 2010, give us a sense of the size of the business. What were you revenues in 2010?
Bill: Last year was a major milestone for us because we crossed the $10 million revenue mark for us. So we’re very proud of that accomplishment.
Andrew: Congratulations. How much of a leap was that over the previous year?
Bill: It was about a 30% leap. 2010 was a great year. We had a lot of things come together in terms of our various service lines, and also the adoption of the cloud and cloud-based computing was extremely strong, and again we’re still at the early stages. But we really saw tremendous momentum in terms of the adoption of the technologies that we can bring to market.
Andrew: What size contract do you have with your clients, just to give me a sense of how much revenue a typical client could bring in?
Bill: A typical project for us can be anywhere from two to six resources, from three to six months, so there’s a very large range there. It really depends on the objectives that we’re trying to meet that are customer objectives. So it really depends. There’s a big range there, but we have projects that are $20,000, and we have projects that are $200,000.
Andrew: Gotcha, okay. Now that we understand the size of the business, let’s talk more specifically about what the company does. Can you give me an example of what EDL consulting might do for one of its clients? I want to get a specific example or as specific as you can get, so I can understand your company.
Bill: Sure. So our customers typically come to us because they’re having issues with the complexity of how they go to market. So most people when they think of e-commerce, they think of a company like Amazon.com selling books or something rather simple, but in the high tech manufacturing world, it’s a little bit more complex than that. You think about a company that makes monitors or telco systems. They may have a very, very wide variety of resellers, distributors, and value added resellers, and there may be some things that they sell direct. So keeping track of all those price lists, keeping track of all those customers, and making sure that there’s a seamless experience for those customers and distributors is not a simple challenge. So our focus is really making sure that the right information systems are in place and that those systems play well with each other, meaning translate into that seamless customer experience for that end customer.
Andrew: So they can’t just throw up a Magento site and be done? And have their e-commerce all taken care of?
Bill: That’s a great question, and I think that a lot of companies start out with open source rules like Magento. Actually, Magento works great for many, many companies. What we find is that specially in the B2B world, where their are extreme complexities around price lists, promotions, and couponing, you really need something higher level, something with more robust functionality to handle those types of functionality, especially the complexity around price lists. The other areas where products like Magento fall short is in product configuration, and so when you have very complex configuration rules to build your products, then those types of features and functions aren’t really readily available in the open source world.
Andrew: I see. Now I’ve got to tell you that B2B sometimes feels so much less fun than B 2C. B2C, I’ve got a story here of a B2C entrepreneur who creates a new case for the iPad and suddenly he’s selling millions of them and life is good, and I understand the product. There’s just one product, maybe a few coupons, and life is simple. I guess when you go to B2B, it gets more complicated, everything gets bigger, but different.
Bill: You’re right. You’re absolutely right. It is more complicated, and we used to say less sexy. The flip side of that is that we’re right now in the startup economy, meaning that it’s real easy for anybody to go into business for themselves with regard to setting up a website and putting up a single product on a website. But challenge comes with scale, right? How do you scale? And that’s what we enable. We empower our customers to scale. The easy stuff, yeah, put up your website, whether it’s a Yahoo storefront or open source, no problem. But what happens when you need to start really, really scaling your distribution, going through resellers, going through channels? There’s no simple way to achieve scale, and that’s why B 2B companies and multi-channel market strategies take a lot of time, effort, and focus to execute on properly. There’s just no easy way to do it.
Andrew: I see, and the example that I gave you was the guy that created the Dodo case, and he didn’t sell a million. He sold maybe a million dollars worth of cases. I guess if you wanted to get to a million, and then expand beyond that to other products, then he would start to face some of these problems that we’re talking about. Then he might want other channels instead of directly to users. What do you mean by channels? I hate to go so basic, but Bill I’ve got to be honest with you, I did research on this interview, I got intimidated. There are all these expressions and software that I don’t fully understand. I said, “When I get on with Bill, I’m going to be very open with him and my audience about what I don’t know, and we’re going to go as basic as we need to, because maybe my audience is also going to be in a similar situation when it comes to your business.” So when we talk about channels, what do we mean specifically?
Bill: Well, you have direct sales, and you have indirect sales. I’ll use a simple example, even a company like Oracle. So Oracle, they sell directly to business, but they also have Oracle inside where they embed the database in other products. So for example, Salesforce.com, our biggest alliance vendor, is a huge customer of Oracle’s. So many, many of their database servers run Oracle software, those cloud-based servers. So Oracle is going to have to when they talk about channels, they have government, they have enterprise, they have small business. They typically don’t sell to consumer, but certainly a company like Microsoft, they sell to business, they sell to consumers. You can go out to the Web and buy a copy of Office, right. When Dell needs a copy of Office, their employees don’t go out and buy it in the same way that you do. They have volume purchase agreements set up, different pricing, different volume pricing. So those are just all considered channels.
Andrew: I see.
Bill: There are many Microsoft resellers, so middlemen that will come in and install the software for you, make sure it’s set up, make sure it’s working properly. So that reseller channel is very, very big for both hardware and software manufacturers.
Andrew: Okay. All right. That helps me understand. That helps me get where we are today. Let’s go back and understand how we got here. And thanks by the way for not laughing as I was asking the basic questions upfront.
Bill: These are great questions. The other bit of confusion that we run into when you talk about channels. Sometimes people think about communications channels, so we say multi-channels, sometimes we refer to the fact that you can receive an order via phone, e-mail, there’s even faxes still, probably today, or directly online. So those are all different communications channels. So there’s selling channels, there’s communications channels. So it’s always good to clarify which ones you’re talking about.
Andrew: Gotcha, okay. The selling channels I’m more into. So let’s go back in time. What made you decide to launch a business in 2001, when you launched EDL?
Bill: Well, I’ve always been what I refer to as a serial entrepreneur – cutting lawns when I was a kid, deliver pizzas, whatever. Entrepreneurship is just something that is in my blood. EDL is actually my fourth start up in this industry, and it’s something that fortunately is a great deal of success in the last ten years. But certainly I believe that the downturns are a great time to start a business, especially in professional services. There’s lots of talent on the streets willing to work at a decent rate, and so if you’ve got a strong network, and some strong relationships from your past work, then it’s really easy to get those people and put those people to work. So that’s in terms of scaling in that down economy using a lot of independent contractors, third party contractors early on is a great way to do that.
Andrew: What about finding customers? When it’s really hard to find a customer because everyone is cutting back, you can’t get a sense of what you’re doing right, and you can’t get that satisfaction and excitement of bringing in revenue and bringing in relationships early on. And that’s the stuff that sometimes fuels an entrepreneur when he’s launching a business.
Bill: That’s true, and again it just depends on your industry. In services and professional services, whether you’re a lawyer, a doctor, and IT consultant, it really comes down to your relationships, your personal brand, and your reputation. So if you’ve got strong relationships, a strong personal brand, a legacy of success, those people do fine in downturns.
Andrew: So what kind of relationships did you bring when you launched the business?
Bill: Well, certainly I had the advantage of having lived in the same geography my entire life, my entire career. So that’s one of the advantages of not moving around a lot, is it’s easier to develop some of these long-term relationships. The other one strictly being in the same industry, achieving success year after year, and now decade after decade, it’s just something that you talk about that network effect. eBay likes to talk about that network effect. There is an absolute personal network effect that you can achieve. The longer you’re in a particular industry, the more good new tends to proliferate and come back to you in terms of opportunity.
Andrew: So give me an example of a relationship that you brought in. What’s an early relationship that helped EDL get off the ground?
Bill: Well, when I think about some anchor business that we were able to bring in early on, certainly there’s, what happens is that I had a client at Motorola that moved to another company, a company called Navteq. Naveteq was purchased by Nokia a couple years back. They make a lot of the digital maps for navigation systems. So my client from Motorola went to Navteq and Navteq was in high growth mode and they needed a whole spectrum of services and assistance. Again, that was right place, right time. I had a very strong reputation with a handful of people there, and we were able to build a foundation of a business there, that gave us the momentum, and the positioning to get us through the downturn and into the upswing in the middle of the last decade.
Andrew: I see. Right place, right time, and if you have enough people in your network, then there’s always going to be someone who’s moving to an opportunity like your friend did at Navteq. So what kind of work did you do for them?
Bill: It was primarily CRM related. During that time, Salesforce.com was really emerging. I think about ’01, ’02, ’03. They were setting the bar in terms of software as a service. For a company experiencing extremely high growth, like Navteq at the time, it was a perfect solution to what they needed, which was a quick and dirty solution to keeping track of, again, it was a multi-channel situation. They had large enterprises, they had they’re verticals, they had government, they had all these different channels that they needed to track and manage effectively, and Saleforce.com was the perfect solution because they didn’t have to make that big upfront investment in infrastructure.
Andrew: I see, and they had a way of keeping track of customers, potential customers, and you were the person who they went to when they wanted that instituted in their business.
Bill: Correct.
Andrew: You did it. What was the original vision behind EDL? Before you launched it, what was the vision that you had for the company?
Bill: Well, EDL, the acronym is really Excellence and Delivery Leadership, and what in form that was, was really the ashes of what was then the dot com implosion. There was, and unfortunately at the time, well fortunately it’s a long time ago, but at the time consulting really, especially IT consulting had a bit of a black eye. There was a lot of, for those of us that were around back then, probably if you were going to use one word to characterize that dot com era, was greed. So it was a very supply constrained environment, and so there were a lot of people in the industry that were new to the industry and really didn’t understand what it took to deliver a very large enterprise complex project. So the failure rate was very high. As a result, you had a lot of bruised feelings out there in terms of using consultants. So EDL was really about getting back to basics, focusing on core methodologies, quality delivery, and making sure that there was very strong alignment with business and technology. So the fact that technology was always aligned towards the business value, ROI, and solving business problems, and not the technology, for technology sake that, that gee whiz cool stuff that was so prevalent back then.
Andrew: I see. If I remember right, and you correct me, you were obviously in this industry and you would know better than I would, but as I understand it consultants were getting paid a lot of money to add very impressive sounding technology, that either didn’t get billed or that didn’t meet actual needs, and so there’s all this money going to waste and it was okay to waste that money when you were trying to reinvent the future and you had a ton of money and you had all these visions of glory that were going to happen overnight. But once the market went, once the bubble burst, then it became an issue. Am I summing it up right?
Bill: Well, the root cause, in my opinion, was the fact that there was this need for speed to market. So it was all about the first mover advantage, or this perceived first mover advantage in the dot com era. So everybody wanted to be first to market. There’s this real big land rush to get in first, and so people tried to cut corners. In IT, it’s very, very hard to cut corners and still be successful. It’s very, very hard to not . . . for example, if you don’t have your requirements defined very, very succinctly and very clearly, how do you know when you’re done? How do you find success? And so a lot of these projects were rushed, let’s just go straight to development and we’ll figure it out once we get there. A lot of them just never figured it out, and by the time they did it was too late.
Andrew: I see.
Bill: So that’s again, the rigor that we like to enforce is really around our process for going to market and our process for delivering. Making sure that, that strong alignment is there.
Andrew: All right. So that’s what I was going to ask you next. I understand that friendships and relationships and reputation will get you in the door and give you a better shot than others. But addressing this concern that people had and the fear that they had, and as you said, people weren’t excited to bring consultants in. How do you get over that?
Bill: Once you’re in the door, you just need to keep delivering value. So it’s the whole thing about, live every day like your hair is on fire. You really need to be on the edge and take nothing for granted. Your client must be delighted at all times. You need to get there before they get there. You need to leave after they leave. You need to under promise, over deliver. All of those things matter, and so it’s about proving yourself, not just once, but every day. It really, really does matter, because there are new people that are brought into every project. People come and go, and so you can just never take anything for granted.
Andrew: So how do you prove that when you have a big client like Navteq, that gives you a big contract? How do you keep proving every day and every week and every month that you’re worth the time and worth the money that they’re investing in you?
Bill: Well, again, it’s about setting the proper expectations, and then assisting them.
Andrew: Can you give me an example of how you did that?
Bill: Sure, sure. I mean, you know when we originally went in there and we talked about the promise of this technology, the promise of cloud technology, we came in, and we’re bidding against other CRM vendors at the time. Our bid was much lower than some of these other competitors, because again when you look at the total cost of ownership, the initial cash outlay was far greater for some of these on-premise alternatives. What we were able to do, is we delivered on every set of expectations that we set. We did what we said we were going to do. When we said we were going to be up and running in three months, we were up and running in three months. So at that point we were able to deliver and talk about the next phase, and talk about the next project.
Andrew: So how much of this was picking the right product to bank on? Salesforce, which was cheaper for your clients, which was easier to implement, which was faster to get up and running. How much was it that?
Bill: A lot.
Andrew: Okay.
Bill: That’s a big deal, and that’s something that I particularly pride myself on, quite honestly as, my job as CEO of EDL Consulting is to always be looking two years ahead. So what are we going to be doing two years from now? I mean the success we had last year was because of decisions we made in ’08. The success we’re seeing this year is because of decisions we made two years ago, and similarly the decisions that we make today, we may not feel the impact for 12 to 24 months, but it’s having that alignment with where you think the industry is going. So I like to talk about, it’s the old Wayne Gretzky thing, in terms of going where we think the puck is going to be. That’s where I’m steering EDL with respect to the types of technologies that we’re investing in today, and where we’re placing our bets on the future.
Andrew: So I wonder about that a lot, like for example when smartphones were just starting to come out or the modern smartphones were starting to come out. If you were banking on webOS, which Palm came out with, and not the iPhone and not Android, you’re banking on a model that wasn’t going to help you build a strong business. Same thing here. If you would have banked on the wrong software, you wouldn’t have had the success that you had in the early days. How do you pick the right platform? How do you pick the right company to work on?
Bill: Well, certainly we make mistakes all the time. We pick the wrong players sometimes, so the future is not knowable. What we can do is, again based on our experience is make some educated guesses on those products that we think will be most successful for a services company, I think to mitigate your risks around a decision that you make, bets that you place on certain technologies, it’s important to have a portfolio of products that you go to market with. There have certainly been mistakes, again, that we’ve made in the past where we thought a particular software company would make it and would have a big impact and they didn’t.
Andrew: For example?
Bill: But we didn’t bet our business on it.
Andrew: Give me an example of a product that you banked on, or that you expected to do well, but because you didn’t bet your whole business on it, you were okay. I want to learn how you adjusted to it.
Bill: Well, again, first of all, one of the things that we do is, we try to stay as focused as possible. So when I talk about a portfolio, I’m talking about two to four vendors that we partner with. So what a lot of companies do in our industry, if you go to their alliances page, you’ll see a list of 20 or 30 vendors, right. We pick three or four that we say, you’re not just our partner, but this is a marriage. This is something that we’re going to invest in heavily. It’s not just a partnership on paper, and so that’s what I mean by when we talk about alliance and we talk about a partnership. It’s a very, very strong relationship that we are involved with. I talk about product configurations. There have been a number of companies that have sort of come and gone in that space. Some of them are still in business, so I can’t diss some of these companies, because they haven’t quite disappeared yet, but they’re fading.
Andrew: Can you mention one, without mentioning the name? Just to help me see how you go through the process and how the business dealt with it.
Bill: Well really, and again, these are market driven. So it’s not usually us making these decisions. We’ll go to market and we’ll just see less demand in a certain area.
Andrew: I see, and so you focus if you have four products that you’re working on, you’ll focus on the three that are doing well, and maybe the one that’s doing especially well will get more of your attention than the others. I see.
Bill: And certainly right now, it’s for the most part all chips are on Salesforce right now. It’s such a wide portfolio and the lead that they built in enterprise class cloud computing, especially in the platform as a service space. We don’t see anybody coming close to them, I mean we’ll see where Microsoft shakes out in this one, but Salesforce has a tremendous lead in that space right now.
Andrew: All right. Now let’s talk about people. Who’s the first person who you brought on?
Bill: Well, there were a number of people early on that I brought on as, I think I mentioned this as sub-contractors. So the sub-contractors really what I ended up doing was, I needed to get out of the business of billing. Of actually doing the work, and then getting to the job of managing, right?
Andrew: Did you start off by the way, as doing the work?
Bill: Yeah.
Andrew: You did?
Bill: Yeah.
Andrew: So how long did it take you to decide or to get to a place where it was time to move the work on to someone else?
Bill: Yeah, I was waiting for the market to get better. So in 2001, as you may recall, it was just about putting food on the table, quite honestly. So, that’s where I was. I was onsite on Navteq and billing and running a project, and I brought in sub-contractors as needed. So as other opportunities built up at other companies, I was able to pull myself out of a billable role so that I could over time focus more on growing the business. That’s really the biggest decision that any, and again in professional services, that every entrepreneur needs to make at some point. Is when do you stop being on the front lines and delivering with your customers, and when do you start running the business? For me, it was ’03, ’04, when I saw the market start to turn and stabilize, and then saw the demand pick up. You sort of make that cut call, but it’s painful, right, because there is a short term hit in terms of cash flow, and so you have to be able to take that hit and move on and look at the big picture.
Andrew: How did you find the right people to pass the work on to?
Bill: Well, fortunately once again, my network really came through here. Having been in the technologies services industry literally since the mid ’80s, I built up a very, very stable of contacts and other firms that I could trust to bring in on an as needed basis.
Andrew: Okay. Still it seems like it’s a very seamless easy process. But I’ve got to believe that in practice it was a lot harder than that. Can you describe what that was like? How do you go from running the show yourself, doing all the work yourself, including the billing, to passing it off to someone else, and eventually moving yourself out of the day-to-day role? That’s a process that a lot of entrepreneurs get hung up on, that trips us up.
Bill: Yea, I mean it’s incremental, right. I mean it was very incremental. I mean another big milestone for example was hiring a full-time HR person, hiring a full-time finance manager. So you look at these things, and it is very, very incremental. So even though I was doing things, that was running the business, I was still doing things I shouldn’t be doing. I shouldn’t be cutting the invoices. If I’m going to scale the company, that needs to be somebody else. I shouldn’t be doing the on boarding, that should be somebody else if I’m going to scale. It’s this continuum of elevating yourself as an entrepreneur to higher and higher level of value at activities. The challenge quite honestly, my challenge now is actually the opposite. So you know we talk about the fact that the goal early on is to get yourself out of client facing roles, certainly professional services you want to have relationships with your clients at all times. So I love being in design sessions, and I love being in early stage requirement sessions and talking about the big picture, and helping clients envision that future state we’re they’re going to have all, everything that they’re hoping to get out of they’re go to market strategy. Finding the balance between running the organization and staying close to your customers, I mean you see this at some of the very largest organizations, Marc Benioff, Michael Dell, these CEOs, they all have client relationships. They are to some degree customer facing. That’s sort of my thing right now. I’ve come full circle, and I’m very interested in, how do I make time for those important touch points, where I need to be, I need to have my finger on the pulse of my key customers, to make sure that we’re delivering to their expectations?
Andrew: Okay. Could you be more specific with some of this, because I want to understand? Here’s what I’m looking for. I’m looking for the, hey you know one day I woke up, and I said I didn’t get much sleep last night, because I was doing invoices. Well, I’ve got to find a way to pass it on. So I was looking around, how do I find a person to pass it on? I mean you really just assume that someone will eventually do this when you build a business, but when you’re actually trying to find a person who’s going to handle your finances, your most important, or the most critical part for a business portion of your revenue, one of the most important parts of the business, you’re looking for the right person to do it. So I started going to my aunt, my uncle, and I said maybe they could come in or maybe I looked online. I tapped my network. Give me that specific process. I want to understand how you went through it, so that I can understand it when I go through it, or my audience can understand it when they go through it.
Bill: Well, early on, I knew that I needed to stay focused on the core business. What is the core business? It’s delivering value to our clients. So maybe I’m not out there billing. But if I’m not out there billing, I need to be supporting my consultants and my employees to make sure that they’re delivering at peak levels. That’s the core business, to make sure that we have happy customers. Everything else is secondary. So how do you make sure that the secondary stuff is getting done, but is not distracting? So early on, what the strategy was, was to leverage third parties. So one of the first things that we did, is we contracted with a PEO, Professional Employment Organization. What they do, is they handle all the payroll and banking, taxes, payroll taxes, and those types of things. So I didn’t have to worry about that. I paid a premium, I paid a per head fee for this PEO to come in and handle all that for me. So that was a big thing that I didn’t need to deal with anymore.
Andrew: Is this like an ADP, a company that just does.
Bill: Yeah.
Andrew: It is, okay.
Bill: Right, exactly. So we work with a company called Trimax, and they are like an ADP, ADP is known for their payroll services, but they offer a much wider portfolio of services as does Trimed. So all of our benefits, our health benefits are managed through Trimed, our payroll, and taxes, so we have employees that live in about 15 different states, so you’ve got a lot of employment tax issues to deal with, and there’s no way I could stay on top of that.
Andrew: Okay. So I can see how you’d pass that on to them and let them deal with it so you can focus on the core value that you’re delivering your customers. What else did you do like that, to pass on the non-core elements?
Bill: Yeah, I mean recruiting was another area, so we brought on contract recruiters so that those costs were variable. Even then on the bookkeeping side, I found somebody that was part-time that we could work on because we couldn’t justify a full-time person. Actually, my accountant knew somebody who knew somebody that was looking for some part-time work, and we were able to do that. One of the things quite honestly that I did successfully was early on, was tap into the stay-at-home mom network.
Andrew: Okay. Tell me about that.
Bill: Yeah, it was fascinating, and actually still today, my head of marketing and my head of talent management both came to me three or four years ago because they needed to balance that quality of life thing and work virtually. So, there are legions of stay-at-home moms that are out there, that have decided for quality of life reasons, to scale back, raise a family, but once those kids reach school age, have maybe 30 hours a week that they van devote to a job if they could work from home, and so I was able to tap into that.
Andrew: How did you find them? I can see the value there.
Bill: It’s just word of mouth, really. You know I live on the North Shore of Chicago. It’s a bedroom community, and you just ask around. You’d be amazed. You’re surrounded by professionals and former professionals. Just go to a soccer practice and ask around, and you’d be amazed at what you find.
Andrew: What else? I love that? What other ideas did you use?
Bill: Well, the other one again, was we were cloud based from day one. For example, all of our infrastructure, we had our own dog food. I mean I had our telephony system was a virtual PBX. It was an IP based telephony system, which 10 years ago was pretty radical. So I could plug my laptop into any wall outlets and have my phone with me. We used our accounting systems, was at the time QuickBooks online, so that’s how, and of course Salesforce.com. So that’s how you can build and operate a virtual footprint, and take advantage, for example of the moms. If you have to get them into the office because the servers are in the office, that’s not going to work. So all our systems from day one were cloud based. Every non-essential, well let’s say non-core business function that wasn’t having to do with delivery, was outsourced. And again, the use of sub-contractors so that we could manage the even flow of demand, minimize our fixed cost was also very key early on.
Andrew: We talked about how you reached a major milestone this past December, by hitting $10 million in sales. Do you remember when you hit the first million in sales? How long after you launched did you get there?
Bill: I do remember. It was really just a couple of years. It was very fairly early on, and quite honestly I was working so hard, I think it was, it was almost the second year. We were almost at a couple mil before I took a look back and said, “Oh wow, we hit a million bucks a year ago, or something like that.” It wasn’t as significant back then, because again we were just so much about being in the moment, and working the scale of the company and getting through the downturn at the time.
Andrew: What then was in the early days, a major milestone that you had to stop and acknowledge and say, “Okay, I can’t believe we did it, but we are here and this is fantastic”?
Bill: I will say about halfway through our growth it was hiring that Vice President of Talent Management. Most people refer to us as HR. We made a conscious example and a conscious effort to make this as a talent management position. Again, in services you have to be client centric and employee centric. Your assets are your employees. They walk out the door every day. So if they’re not feeling like they have a future with you, if they don’t feel like their career path has aligned with the company’s objectives, they need to be feeling like they’ve got the growth potential, that the company is prospering, the career path is there. It is so important to make sure that there is that strong alignment between career paths and strategic direction of the company. So that to me was probably one of the most significant moments, was demonstrating our commitment to our employees at that point in our growth, by hiring this Vice President of Talent Management, because it certainly wasn’t going to bring in billable revenue. I mean this was all about the employees, and it was very, very necessary to get to that next stage of growth.
Andrew: What about taking salary? Did you do that early on? Was there a moment where you were actually able to take a salary that was more than ramen profitable, as we say?
Bill: Well, again, I haven’t had to really sacrifice from a salary standpoint.
Andrew: You didn’t? Not even in the early days?
Bill: Well, in the early days, I was billing directly, and so it was hourly and so there wasn’t that hit. Where the hit was really was cash flow. I could have, for example, taken a lower salary to reduce my risk, but we were very good at maintaining cash flow and making sure that the financing was there. So I bankrolled this thing early on. So you kind of look at it like you’re borrowing from yourself almost. So I was watching that home equity line ratchet up a little bit in the early days, sure. But I kept the paycheck coming, because I needed that mental reinforcement. I didn’t want to feel like I was working for nothing, and so it was very, very important to me to feel like I’m getting paid for what I do, even though on the other side, maybe my credit line was going up a little bit. I was going into debt a little bit more. It was somehow easier for me to rationalize that, because I was financing a business. I wasn’t financing myself. It was really all about the business.
Andrew: I’m actually looking at a scanned picture of this Sunday’s New York Times. There was a story here on Jim Kramer and the heights that he reached, but it also has a paragraph in it about how, let me see if I could read it, if it will make sense. Kramer began experiencing long bouts of anxiety, increasingly severe panic attacks, and imaginary coronaries, and then it goes into what he was feeling behind the scenes. Looking back he could be that open, and we as entrepreneurs we can relate to that and say, “Hey, you know what? I’ve been there too.” Can you look back and relate to this? Did you have a situation in your life where you said, “Oh my god what am I doing here”?
Bill: Yeah, last night.
Andrew: Tell me about it.
Bill: No, I mean seriously. This stuff, as an entrepreneur, your life is on the line every day. You can never let up. You can never feel like I’ve “made it.” Andrew Grove, one of my heroes said, “Only the paranoid survive.” If you read that book, you understand. You look at the history of Intel, and there were probably four or five times during the period of that book, that they could have been wiped out, that they could have been gone. You can say that’s true. You look at the legacy of our industry, of the high tech industry, there are companies that come and go every year. The famous one, there was the book, “In Search of Excellence,” and all those companies and only about half of them are still around. Even companies that we might revere and have a great deal of respect for today could be gone tomorrow.
Andrew: So what do you go through, when it happens to you internally, when you’re not in a place where you can rationally say, ok it happens to all of us, this is good for my business to be this paranoid? What happened last night?
Bill: Well, I was being a little facetious about last night, but my point is really that, that feeling of anxiety, that feeling, for lack of a better term, of insecurity about the future, there’s always that element. There’s always that element that you don’t know what’s going to happen. You don’t know which employees are going to be around next year. You don’t know what client is going to cancel a major project because of budget issues. You don’t know which one of your partners is going to get acquired. There are all these things that could go wrong at any given day. You have to be thinking about them and planning as a risk mitigation strategy, not to the point of obsession certainly, but you can’t be completely lackadaisical about these things either. Personally, I see way too many, especially in my industry, in Information Technology Services, I’ve seen way too many of these companies come and go for me to ever relax.
Andrew: You know what? It’s funny you should say last night. It happens to me every once in a while still to this day, and I always thought I would be done with it once I had some financial security. But last night, I said, “Why do I need all this? Why do I need the potential embarrassment that if I say the wrong thing in an interview and everyone’s going to say this guy’s ashamed he doesn’t know what he’s talking about. Or if I lose money here, there’s that issue over there. Why do I need it all?” Let’s just go, and my head started going to panic over those issues, and then it started going to well, here’s a way to retreat from the world so you don’t have to deal with those issues, why don’t you go and take that step and just not have to suffer like this. Then to snap myself back, it wasn’t intentional, I said, “Hey, you can’t start interviews by saying home of the ambitious upstart. You can’t keep glorifying these guys who took the big risks and did big things with their lives, and then go hide somewhere on a beach somewhere just because it’s cheap, just because it’s an easy way out. There is no alternative. You can’t face yourself that way. You have to go back in on Monday and you have to stop thinking about it.” Kind of like the cartoons, remember in those old cartoons where the guy was walking off a cliff, but didn’t look down. He would stay up in the air and keep walking, but as soon as he looked down he would fall? I keep reminding myself of that, and say, “Hey, you know what? If you go into the office the next day with that same feeling, the whole business is going to collapse. Everything, you’ll lose your confidence, and then everything else is going to fall with it.” So that’s the process that I went through. What’s your process for getting back in?
Bill: Well, you bring up a really good point. For us, it’s really more intentional. I talk about the power of intention, when I talk about fear versus faith, that’s at the end of the day what we’re talking about. It’s are you going to be consumed by your fears, or are you going to acknowledge your fears, embrace those fears, hold them and say, yeah, that’s possible, but I have faith, in my abilities and the abilities of my company that those possibilities are not going to manifest? That instead I’m going to manifest a more positive reality. And so I’m a very a strong believer in them, a very, very strong believer in that you always have to have that core faith, that you’re going to overcome these obstacles and you’re going to endure. Do I have moments of doubt? Absolutely. Do I have bouts of fear and anxiety? Absolutely, I’m human. How do you bounce back? It depends. Lately, I’m into puppy therapy. We got a dog recently, and so I’ll just hang out with my dog on the couch and just chill. It’s amazing. I’ve actually wanted to bring my dog to work now, but we don’t have a pet-friendly building. But it’s little things like that, that get you back in touch with your humanity and allow you, I think, to take a step back, take a deep breath, and say you to say, “You know what? It’s going to be okay. It’s just work. It’s just a business. You’ve been through hard times before. Take a deep breathe.” I think there are lots of different ways and techniques for getting there.
Andrew: Puppy therapy’s a new one though.
Bill: Puppy therapy, I’m huge into puppy therapy.
Andrew: All right. We’ve got to spend a little bit of time talking about CloudCraze, newest product, where did the idea come from? Let me read back how I introduced it in the beginning, the first and only enterprise e-commerce product that’s native on Force.com. Why is it that it’s important to say that this is the first and the only on Force.com? Why is that significant here?
Bill: Well, you need to have some perspective on the history of the Force.com platform. So we talked about some of the early work that we did, almost a decade ago at Navteq when Salesforce.com was really associated with CRM, and at the time sales force automation hence the name Salesforce.com. It was a very, very quick easy way to automate your sales force. They’re revolutionized software by saying you can rent or lease this capability, subscribe to it, versus have to pay for it all upfront as a capitol expenditure. That was a very revolutionary idea.
Now, three or four years ago in ’07, what happened was, they opened it up. They opened up their platform to be able to develop general purpose applications on Force.com. That was very, very powerful. They said no we’re not going to be an applications company any more. We’re going to be a platform company. We’re going to take this really, really powerful platform, and make it available for you Dell or for you Qualcomm, and we’re going to allow you to build your own application on there. They’re going to be infinitely scaled, but you’re going to be P&G, you’re going to be able to deploy them to tens of thousands of employees overnight without having to build that infrastructure in place first. Very, very powerful.
Now, at the same time, we had reached a point in our evolution where we had built up a very, very strong domain expertise in enterprise e-commerce. So we were not doing just the CRM piece, but we were building a lot of very, very large scale enterprise e-commerce packages or solutions in the Java world. So we looked at the Force.com platform, and we’re like, “Oh wouldn’t it be cool if we could build e-commerce projects on there?” If we could deploy, e-commerce on there, then they would take advantage of this cool platform. It would have that infinite scale ability. We wouldn’t need to have all that upfront investment. We could probably do things a lot faster and cheaper. We could really shake things up. So with a couple more technology advancements in the form of some technology they called sites, which allow you to expose Force.com work as a website, and actually use that URL as a website, it became technically feasible. The more we looked into it, we put it through its paces, and we came to the conclusion that we could indeed do this.
About two years ago, we started a very ambitious program to fill what we felt was a very large void in the platform, which was around taking CRM and extending it so you could take orders and actually consummate a purchase and do that e-commerce online. We looked at companies like ATG, we looked at Sterling Commerce, which we’re doing a lot of work for. We looked at those features and functions that ATG and BroadVision had, and we said, “Okay, that’s really where we need to be with a product. We need to take that capability and we want to be the ATG of Force.com.” So everything from promotions and entitlements and price list management, couponing, all that stuff. We want to be able to build that package. So we did, and within six months, in late ’09, we had our first customer and it was great. It was a tremendous validation, and since then we’ve brought former customers online. We’ve got three of them in development, and we’re actually seeing a lot of enthusiasm, not just from our customer base, but on behalf of Salesforce.com, because Salesforce looks at us and they talk about this platform, and the abstract in terms of its capabilities, but they need real world use cases. CloudCraze is a great use case for how Force.com can be leverage as a general purpose platform to do just more than just CRM.
Andrew: Can you tell the audience, the example you gave me in the pre-interview, the one about LI-COR Biosciences and how they used CloudCraze?
Bill: Sure, sure. We have a whole case study on LI-COR on our website, so you can, for the folks listening, you can always refer to that after the interview. LI-COR, their situation is very, very similar to what I would call a typical CloudCraze customer. So they’ve got an existing legacy e-commerce system. Theirs happens to be a custom Java application. It had become very outdated. When I say outdated, it was very expensive to maintain, and no longer met the needs of their business. They didn’t put enough money into it originally for it to properly architect it, and it was just very, very unwieldy. It took a very, very long time to make changes. So they were looking to upgrade their platform, took a look at a couple things. They happened to be talking to their Salesforce rep, and their Salesforce rep said, “Hey, did you know that you can now do e-commerce on Force.com?” And they said, “No we didn’t know that. Tell us more.”
So we were brought in and one thing lead to another, and LI-COR took what was then a little bit of a risk, because we were an unknown quantity. They were actually our first customer, and so they were very, very happy with the outcome, in terms of their capabilities today. But one of the things they were able to do is, because this was native on Force.com, literally they had $100,000 budgeted for integration that they were able to save off the bat, because they had that money budgeted for Salesforce.com integration. Well, guess what? We were already native on Force.com, so they didn’t have to do that integration. So right off the bat they saved $100,000 just through that selection.
Andrew: What does being integrated with Salesforce allow them to do, or what does it allow their customers to do when they’re buying on their website?
Bill: Well, the fact that we’re native on Force.com means that there’s this ability to be tied into the business functions that are traditionally CRM, to achieve that integration in a cheaper easier and nimbler way. So I’ll give you an example. You go to the website and you register for the first time. That could create a lead. A lead as it’s typically known as, especially in the B2B world where a new user would typically get some follow-up via e-mail or a phone call in the B2B world. So in order to create that lead, that would take a lot of integration energy. If their CRM system for example was Seibold, they’d have to come out of the e-commerce system do a web services call, know exactly what call to make, fire off some logic in Seibold that would then create the lead. Very, very complex integration, quite honestly a potential failure point in the architecture. But in our instance, since we’re native on the Force.com platform, we just create a new record in the lead object, and it’s done. So there’s no integration, there’s no web services call, there’s no real code.
Andrew: I see. It’s almost as if a salesman or someone with in the company typed in the leads information into their contact management system, and then the rest of the business would operate as it would.
Bill: Right.
Andrew: So the customers typing it into a website, but it’s like a salesman in the company or salesperson in the business is typing it in internally, and I can see how that tightness would help.
Bill: You can do the same thing on the back end for example, with an abandoned shopping cart. You could create a case in the service cloud in the customer support site, somebody abandons the cart, just create a case, and somebody calls you up and says, “Hey I noticed you abandoned that cart. Is there something that confused you or a reason? We can help you do that.” So you can be proactive and responsive at a far, far cheaper price point.
Andrew: I read an article when you first came out, that you were looking for, let’s see we couldn’t even have a conversation with a potential customer if they weren’t willing to spend a million dollars in services. So, is that true, is that the size customers that you’re looking for?
Bill: Well, no that was really, we were referring to that in the Java world.
Andrew: I see. Okay.
Bill: Right, so historically, our Java e-commerce, enterprise e-commerce projects, you know when you talk about getting these very, very large scale projects, yeah, they’re a million bucks and more. To get it up, to get it integrated to the back end.
Andrew: And in comparison, now what would it be?
Bill: We’re at 20 to 25 percent of that price point.
Andrew: Wow.
Bill: It’s really disruptive. We believe that, again, the million dollar price point was out of range for a lot of mid-sized businesses. So really this is the first time that a mid-sized business can achieve on the same level of functionality as some of the larger enterprises out there for a much better price point. You can achieve parity now, whereas before you had to settle or muddle through from an e-commerce standpoint.
Andrew: Well, company is CloudCraze and EDL Consulting. EDL, I now know what it stands for, Excellence in Delivery System, excuse me, E, Excellence, what is it? I’m not even reading my notes properly. EDL is Excellence and Delivery, what?
Bill: Leadership.
Andrew: Leadership. Leadership. All right, Bill, thank you so much for doing the interview, and thanks for taking those baby steps with me in the beginning of the interview and throughout.
Bill: Thanks, Andrew, enjoyed our conversation.
Andrew: Awesome. Thank you guys all for watching. Bye.
Bill: Bye.
Andrew: Cool.
