Recovering Lost Revenue: Vindicia CEO Gene Hoffman (Part 7)

Sramana: If your business model holds you could be on to something great. I am slightly skeptical about whether or not your business model will hold. If it does then you should hit serious hockey stick growth in the next couple of years. What was your revenue last year?

Gene Hoffman: In 2010 we did 7.4 million dollars in revenue. The question is which businesses that go with us will be able to scale themselves.

Sramana: They also have to accept your business model. Are taking from total revenue, or just the revenue you save? I can’t imagine someone like SalesForce.com accepting that business model.

Gene Hoffman: They do because when you take our fees and compare them to the revenue they received by extending their customer lifeline, our fees are dwarfed. In the trailing 12 months we have increased our customers revenue by 80 million dollars. We take from the total revenue that we put across our platform. SalesForce.com is not a customer of ours yet, but we do have large customers. Symantec puts a large portion of consumer business across our platform. They pay significantly less than what we recover for them. As we go up in scale we will come down from our 2.5% somewhat as well.

Sramana: Tell me more about how you built the company from a financing strategy?

Gene Hoffman: Initially I used my money and a little bit from Symantec. I then brought in Doll Capital because I had some personal connections there. As we started to scale the business and make the transition to the CashBox business model we brought in Burleson. They were very understanding of the consumer subscription business and they were big believers in the online gaming business. Most recently we brought on FTV Capital. They are a classic late venture fund. We have raised 40 million dollars all together.

Out business model evolves over time. We are less of a billing payments company and more of a marketing infrastructure company. When you think of customer lifetimes and acquisitions we are helping that marketing person figure out how to acquire and keep customers more efficiently.

Sramana: How is your growth rate?

Gene Hoffman: One of the most interesting things about our business is that our growth rate is good, but not wow. The average sales lifecycle is in the years. However, once they make the decision to use us they don’t change that decision. When you run our CAC ratio we maintain a top 10% of all companies. That makes me extremely excited. We have a very, very small client churn which is due only to companies that go under or companies that drastically change their business model. Revenue churn is negative. We have more existing customer growth than we do customer losses.

Sramana: What does it take to get into some of the larger SaaS companies?

Gene Hoffman: Some of it is how those companies go to market. If they have stuck with SaaS 2.0 models where they have a sales rep sending an invoice, Vindicia is a little less relevant. When you have folks like YouSentIt, where their primary customer acquisition is online, I have a lot of ROI to add. Those are the companies that I am penetrating. The world is so large right now that I don’t even run into competing companies. My biggest competition is that these companies think they can build the capability themselves.

Sramana: This is a very interesting story. I think the hockey stick will come from businesses that fit into your online subscription model. Thank you for your time and I look forward to following your company.

This segment is part 7 in the series : Recovering Lost Revenue: Vindicia CEO Gene Hoffman
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