On The Way To 100 Million Dollars In SaaS Revenue: Vocus CEO Rick Rudman (Part 6)

SM: Aside from educating your potential customers, what else governs your growth?

RR: We are a very profitable company. Our guidance for 2009 is an 18% operating margin. We have delivered a balanced growth and profitability model to our investors. I could take profitability down to zero and put that money into sales and marketing to make us grow faster. Up until 2009 when the economy went bad, we were already growing at a top line of 35%.

We have about 160 quota-carrying sales reps. We would have to continue to grow that as we did in 2009. We grew that by 20% in 2009.

SM: Are your inside sales reps all in the United States?

RR: Predominantly. We probably have 10% of our sales reps in the UK.

SM: Have you explored the possibility of using an offshore sales force?

RR: We have talked about it a number of times, but we have not done any serious work on it. We have a very large inside sales organization. There are certain areas of the world where our costs would be a quarter or less of what we pay now. In the limited research that we have done, we are concerned about the trade-offs. We are not sure the application can be sold as effectively from another part of the world.

SM: Where in the United States is your inside sales force?

RR: It is located at our headquarters in Lanham, Maryland. In terms of U.S. geography we are in a good area. The costs are fairly low, but other countries could be much lower.

SM: In the SaaS world there are close to 1,000 SaaS companies. The inside sales driven model has become the predominant way which SaaS companies are selling. You are describing a large TAM, but you need to increase your inside sales force in order to grow. The question remains to be seen if a different geography would not offer a different cost structure which would enable more rapid growth.

RR: There are not that many large SaaS companies out there, and I do not see a lot of precedence for companies that have moved their operations offshore. I am actually not aware of any SaaS company that has been able to move their inside sales force to India. I know there are some who have moved to various locations inside the United States.

SM: It is an emerging area. To date I have only seen one company which is succeeding using India-based telesales. I believe that Zoho uses that model. I believe there are many more that have looked at moving their inside sales centers to various near-shore centers in the United States.

RR: I know that WebEx had a huge inside sales center in Texas. By doing so they were able to get their costs lower than ours, although even they are still paying more than they would be paying if they had their sales force in India. I believe that their inside sales representatives make about $50,000.

This segment is part 6 in the series : On The Way To 100 Million Dollars In SaaS Revenue: Vocus CEO Rick Rudman
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