Building a Global Enterprise Software Company from Portugal: Paulo Rosado, CEO of OutSystems (Part 5)

Sramana: When did you start to compete for deals in the United States?

Paulo Rosado: I think we started our efforts in late 2007.

Sramana: How much European business were you doing by then?

Paulo Rosado: We were doing quite a bit of European business. We had less than $10 million in revenue when we entered the United States. At that time, we went through a painful transformation in our company as we migrated towards a subscription-based business model. We basically flattened our revenue.

Sramana: Did you make your existing European customers transfer to that perpetual licensing?

Paulo Rosado: Yes, it was a multi-year process. It took us about four years before we had the install base converted.

Sramana: By the time you entered the US in 2007, was your business European telecoms or had you already diversified into other verticals?

Paulo Rosado: We diversified in 2003. We have a very large concentration in corporate service companies. That is probably our biggest market. That encompasses every company that has a business which needs a digital platform underneath. They have some form of service that they provide to another company as a component of a supply chain, and they need a digital platform to support that service. A lot of people believe that can be addressed with CRM and ultimately, that is not true. They integrate with CRM, but there is a lot of work done from scratch. That is a perfect environment for us.

Sramana: When you moved to the US, did you enter with a particular vertical in mind?

Paulo Rosado: We did try to focus on verticals. We decided to go after the bio-science submarket, and it turns out that we did not do very well there. Our initial sales were very successful, but we could not scale beyond that. We did get a slew of other companies coming to us expressing interest in what we were doing so we moved back into a platform model within six months.

Sramana: When you look back on your entry to the US market, what are your lessons learned?

Paulo Rosado: European companies have a big advantage as well as disadvantage. The big advantage is that because they are coming from a smaller market, they build products that take a lot longer to build and solve a wide number of problems. You see a lot of platform-driven companies coming out of Portugal. These type of companies would be killed in the US, they would not be able to mature.

The disadvantage then is when you enter a large market like the US you now have to pick a niche because everyone is niche based. Sometimes you never get out of that niche. Our advantage in having enough time to invest in products like this is that now whenever we go and enter the market, we have an easy way to compete in the marketplace. Our challenge is that whenever we want to create targeted campaigns, our pitch ends up being almost like a Swiss Army knife type of pitch.

A lot of what we do from an operational point of view is creating templates. Our marketing strategy is to select a niche and sell our solution through the lens of the templates. Customers are starving for a technology that allows them to fill the white space and holes, which they have a ton of. We have companies that have rented 15 different SaaS systems and as they grow, they have tremendous adoption issues.

This segment is part 5 in the series : Building a Global Enterprise Software Company from Portugal: Paulo Rosado, CEO of OutSystems
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