Serial Entrepreneur Zack Rinat on Model N (Part 9)

SM: Where are you now in terms of size, market landscape, positioning?

ZR: Model N right now is a leader in revenue management in the life sciences and semiconductor verticals. The life sciences market is a more complicated market. It is segmented into medical device and biotechnology. These are two distinct markets. The company has a combined 60 to 75 customers.

In semiconductors we have more than everybody else combined. In life sciences we competed with I-Many, a company that has been there for 25 years. In the last three years, on head to head competition, we have won about 88% of the deals.

SM: The people you are competing against are the contract management players and the pricing players, right? Whom else do you see in the deals?

ZR: Our deals change depending on the industry. In the high tech business we compete with Oracle and SAP. In life sciences it is mainly I-Many.

SM: Where are you in terms of size … your deals are million dollar deals?

ZR: Our average deal size is about $1.5M.

SM: Is it a licensed software business model?

ZR: It is a combination between software, support and maintenance, and professional services. However, we work very closely with system integrators such as Accenture, Deloite, etc. to bring it to market. Funny enough we also partner with SAP and Oracle. We not only have a competitive relationship with them, in some areas we collaborate. Overall, it is more collaborative than competitive.

SM: Have they tried to acquire you?

ZR: They may try to acquire us, but our objective from the beginning was to create a large, independent, public company.

SM: Why a public company?

ZR: I have tried twice and have been unsuccessful. Hopefully the third try will go all the way.

SM: It really matters to you that you build a public company then?

ZR: I would love to build a public company.

SM: Why is that? It is a pain to run a public company.

ZR: It is, but my objective was to create a successful, enduring company. I have created two which were enormously successful but did not endure. Hopefully this one will endure, however there has never been a more challenging time. The company has about 280 people and we have our headquarters in the Valley. We have offices in Chicago, Boston, Princeton and we have a few satellite offices in Minneapolis, Austin and in Atlanta. We just opened an office in London and we hired an ex VP from SAP to run our European operation. We also have an office in Hyderabad in India. We have 60-70 people in Hyderabad. We just finished the fiscal year and the only guidance I will give you is that we are somewhere between $40M and $45M in revenues. The company has been cash flow positive for eleven consecutive quarters and we have only raised two external rounds of funding.

This segment is part 9 in the series : Serial Entrepreneur Zack Rinat on Model N
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