Bootstrapping to 25 Million, Then Raising A 23 Million Series A: Coverity Cofounder Andy Chou (Part 5)

Sramana Mitra: How does your business break down within your clients’ structure?

Andy Chou: A majority of our business comes from embedded software. That includes consumer electronics, military and aerospace, medical devices, mobile, and verticals like that. We do have ISVs as well, and we are just starting to crack into the enterprise IT space.

Sramana Mitra: Why is your core market embedded software?

Andy Chou: We analyze C and C++ as a language, and that is the language used in embedded software. Another reason is that a defect in those types of systems requires sending a field engineer out or a hardware box upgrade. That is much more expensive. I also think another reason we have had such success in the embedded space is because there are no good solutions otherwise. You can’t use dynamic analysis.

Sramana Mitra: It sounds as though you found a niche and are addressing a specific gap.

Andy Chou: It is a great starting point for us, and we worked hard to dominate that niche.

Sramana Mitra: The Internet has created a distributed environment for developing software. In most cases it is not of the same complexity as embedded software, but I would imagine the quality requirements of that software are still critical. Is there a possibility that you could infiltrate that population of developers?

Andy Chou: Absolutely. We look at mobile development and enterprise applications, and we see millions of developers out there writing software. As software gets more capable it gets more complex, and the more complex it is, the more difficult it is to get right. A single line that is wrong with software can take down an entire software system.

Modern systems consist of millions of lines of code. It is like a house of cards where one wrong thing can result in a catastrophic problem. The key is fixing problems when the code is written. That is when you can save time and money. The trend is that quality in software is getting increasingly valuable, which makes us increasingly important. That is why we have seen financial services become our first big growth segment after embedded systems.

Sramana Mitra: Where do you go after financial services? What market segments are ready for penetration next?

Andy Chou: If you look at the Fortune 1000 you will see that all of them are becoming software companies to some degree. Each company has software infrastructure to some degree. Each company that I have talked to has customizations to their third-party software. There are applications for Coverity everywhere. These companies have thousands of software developers working for them. Outside of financial services, we are doing very well in automotive.

This segment is part 5 in the series : Bootstrapping to 25 Million, Then Raising A 23 Million Series A: Coverity Cofounder Andy Chou
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