Bootstrapping to 25 Million, Then Raising A 23 Million Series A: Coverity Cofounder Andy Chou (Part 2)

Sramana Mitra: From a computer science point of view what was it that you were doing? How were you solving the problem?

Andy Chou: In the world of static analysis the idea is to take the source code for a program, dissect it and digest it, and then analyze all of the different paths through that program. We can then semantically detect problems along a specific path such as buffer overflows or a pointer reference error. You do that by symbolically executing the program by pretending the variables are symbols and determining what happens to those values as the program executes along its different paths. It is a systematic way to review the code and find inconsistencies and crash causing defects automatically.

For a long time some of the core technology has been used in compilers to optimize the speed of software. Very little of that technology has been used to find defects. We adapted that technology to help find defects with very few false positives. This had been done before but never in a way that produced accurate results or that was capable of being scaled to very large code bases with millions of lines of code. We figured out how to build static analysis in a way that was scalable, accurate, and that developers could actually use.

Sramana Mitra: You worked on this technology for four years and had a reasonably well formed prototype. What came next?

Andy Chou: It was definitely a prototype. Only the researchers could run it because it did not have any of the things developers could really use. It was a pile of code that we licensed through Stanford Universities Office of Technology Licensing. We struck a deal to exclusively license our own technology back to ourselves and formed the company in 2003. There were five of us who founded the company, one who was a professor and the rest of us were PhD students in computer science.

I spent two more months cleaning up my thesis and finished my PhD. The others just quit school and jumped into it right away. This company got bootstrapped because we could sell consulting services and products from day one. We had tiny amounts of initial capital. We wrote checks of 5,000 dollars a piece to start the company. That situation persisted for four years.

Sramana Mitra: So you were talking to chief architects and VPs of Engineering and helping them clean up their code bases?

Andy Chou: Essentially that is it. We often talked to someone who was in the know. We did that for four years while we turned our prototype into a real product that could be scaled up. We figured out a model for selling the product by offering a trial that demonstrated capabilities. We built up the core foundation of the company.

Sramana Mitra: How much revenue did you generate during those four years of bootstrapping?

Andy Chou: The first year we had 400,000 of bookings. We hired our first VP of Sales that year and he told us that the next year we needed to target 4 million dollars of bookings. We thought he was nuts but we ended up doing that. In 2005 we did 12 million dollars in bookings.

This segment is part 2 in the series : Bootstrapping to 25 Million, Then Raising A 23 Million Series A: Coverity Cofounder Andy Chou
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