Parallel Entrepreneurship: Serguei Beloussov, Founder of Parallels (Part 7)

Sramana: How did you grow? I am assuming that you were selling multitenant infrastructure to these hosting companies?

Serguei Beloussov: What we initially started building was very ambitious. We wanted to build the storage, operating system, system management, automation, and services. This would enable us to build applications in the ASP mode. That is a lot to do. We quickly split off the storage piece into a focused company, Acronis, that does storage management. The second company was still SWSoft, and that company still sold to hosting providers.

Sramana: What happened to SWSoft?

Serguei Beloussov: We continued trying to sell to hosting companies. We tried to raise money in 2001, but that was not possible. I found some innovative ways myself to fund the company that involved credit cards, selling apartments, cars, and mortgaging everything I had. In 2001 we had $50,000 in revenue. In 2002 we did $500,000 in revenue.

In 2003 we made two major acquisitions. We acquired a German company as a means to get access to the German market. We also acquired Plesk, which was a U.S. company that had R&D in Russia. The combination started growing quickly.

Sramana: How did you finance those acquisitions?

Serguei Beloussov: I got the money from my existing successful businesses. I funded myself. Acronis was still part of SWSoft and was profitable. We had about $2.2 million in revenue in 2003. We got to $35 million by 2006. This was all by selling hosting automation software. Hosters are application service providers; they just provide it to various small businesses. Typically a hosting company has a client with three to five employees. In 2006 we released Parallels Desktop and changed the name of the company in 2007. Today 35% of the business is related to that and 65% of the business comes from hosting providers.

Sramana: What is the desktop business?

Serguei Beloussov: It allows you to run Windows applications on a Mac. It is installed on 6% of all Macs in the world.

Sramana: What triggered that product line?

Serguei Beloussov: It is a virtualization product line. It is part of our infrastructure for service providers. We build virtualization software. We never sold it to large businesses like VMWare, but we did see the opportunity in the Mac space. We are the market leader in that space. Parallels has about 900 people with two businesses. The cloud services enablement software for companies like GoDaddy and the Mac virtualization business.

Sramana: You have obviously started a lot of different companies. It sounds as though you have basically done a lot of companies and financed them by yourself. In the beginning you did it instinctively, and then over time that model matured. Is that an accurate observation?

Serguei Beloussov: That is accurate. I have never financed a company. When we went out for venture financing in 2005 that was not funding, that was just us selling a piece of our business. I have always funded businesses with cash from other businesses. I am actually now the chairman of Parallels and have focused on starting other companies. I have started Infratel, which is a voice services. Acumatica is a cloud EPR company and is doing extremely well.

About a year and a half ago I started doing venture investment with Runa Capital, and that is what I do right now. There was no grand design. It was done instinctively. I was just pushing forward all the time. When it became too hard to push forward, I would focus on another opportunity.

Sramana: You have a few companies that have hit critical mass. Are you planning on taking these companies public?

Serguei Beloussov: I won’t make any comments on that. Those companies today remain primarily mine, although we do have venture investors in some of those companies. We will have to figure out an exit for those investors. There is about 30% venture money in each business today.

Sramana: Fascinating story; I love your model. Congratulations on your success.

This segment is part 7 in the series : Parallel Entrepreneurship: Serguei Beloussov, Founder of Parallels
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