Lars Dalgaard and his Success Factors (Part 13)

SM: What does it cost to buy a SuccessFactors solution? LD: It ranges. We have multi-million dollar deals. We just told Wall Street (because we want to ensure they know we have a good future so we did something we normally would not do) that in the first 5 weeks of 2008 we did a million dollar deal in retail because we know that sector has been hit very hard. And we did a million dollar deal in financial services. At the same time I saw a deal done yesterday for $5,000 for a 10 people company. It really depends on how many products you buy and how many seats you take.

SM: Monthly or yearly? LD: Per year.

SM: What has been the impact of the market slowdown? It seems like financial services and retail have both produced good deals in the middle of all of this. LD: It is simply because we are not a transactional company that is sitting and figuring our where people work in the company, we are at the core of the company deciding how to run the business. That is why people find we can help them drive topline sales 2-3%, and do it cheaper. When you do both of those, even in a tight economy, people want to buy your stuff.

SM: How much backlog would you predict right now? LD: Our deferred revenue went up to about $101M. In addition we have the off balance sheet backlog which is clients like Yahoo! and REI. They bought a 5 year deal, which means we have this non-balance sheet lock-in backlog that we do not talk to anyone about. We continue to excite investors for the long term and we do not need to blow ourselves up. Nobody in the world is growing faster than us right now, and we have another secret that we are going to reveal later.

SM: Your growth strategy is organic? LD: 100% organic.

SM: I was curious if there was anyone you wanted to acquire. LD: Unlike many people in the Valley, I have had many experiences with mergers and acquisitions. I have asked many people and there just are not that many successful acquisitions done. When you have a good thing going you can destroy it by doing acquisitions. I would never say never, but it is not on the top of my mind.

We did $112M bookings in 6 years. We talked about Kenexa which is a 20 year old company which just barely did $100M, and they bought two recruiting companies that were struggling. I had the opportunity to buy both of those firms; they called me up and asked if I was interested in acquiring them. I told them, “I will take a look at you, but I am warning you I am going to go very deep and look at every single one of your metrics you have never looked at yourself, so I am going to send you a spreadsheet and I would like you to fill that out and if you fill that out, then we can talk.” Just watching them filling that out tells me whether I can work with them or are they already choking.

This segment is part 13 in the series : Lars Dalgaard and his Success Factors
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