Turning a Services Company to a $30M Product Company: Bridgeline Digital CEO Thomas Massie (Part 5)

Sramana: You have made a successful from a non-repeatable services business to something that is highly repeatable and scalable. The product now generates the services, and you are obviously the best capable to provide services around your business.

Thomas Massie: Absolutely. Nobody knows our product better than us. We are able to tailor every solution to exact customer needs according to their business objectives.

Sramana: There is a stupid myth in the market that you should never start a company as a services company and that you should instead focus on being a product company right from the beginning. I have a strong position against that myth. I think that bootstrapping using services, especially when customers drive specifications, is a fantastic way of building businesses.

Thomas Massie: I could not agree with you more. It helps you refine and create a great product. Developing iAPPS on our customer needs has proven successful. We have always been a cash flow positive business.

Sramana: Generating positive cash flow from operations is an important aspect that in your case that is not so vital because you had two successful IPOs. First-time entrepreneurs who do not have that base will find that cash flow is incredibly important.

Thomas Massie: It is important. I may be old school, but I have maintained a fundamental discipline in all of my ventures to generate positive cash flow. The only year we did not generate positive cash flow from operations was our first year. We burnt a few hundred thousand dollars in negative cash that year. We been cash flow positive since then, and we have maximized our investments back into R&D and business scalability. In the past five years we have been able to invest almost $15 million into iAPPS as a product.

Sramana: Old fashioned or not, the values you follow let entrepreneurs build solid, sustainable companies. High-flying companies disappear when the VC money dries up.

Thomas Massie: That is correct. You deserve your equity in your company when you do it this way. We have a clean balance sheet because of our approach. We have strong sales methodologies and professional services delivery disciplines. There is a lot of transparency and accountability.

Sramana: Where is the bulk of your operations today?

Thomas Massie: We have eleven offices, ten of which are in the United States. We have a .Net development team in Bangalore, India. We are headquartered in Boston.

Sramana: Have you done anything in Michigan? I know that they are trying to build an ecosystem out there.

Thomas Massie: We have a couple of channel partners there. We do not have anything ourselves there.

This segment is part 5 in the series : Turning a Services Company to a $30M Product Company: Bridgeline Digital CEO Thomas Massie
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