Bootstrapping a $175 Million Business with Services: TEOCO CEO Atul Jain (Part 4)

Sramana Mitra: What timeframe are we talking about when you were $20 million in revenue in this business?

Atul Jain: About 2005 to 2006 timeframe.

Sramana Mitra: A $20 million dollar business and now you have a competitor that is going belly up and you buy that competitor for cash.

Atul Jain: They were about a $5 million revenue stream and we were able to buy them for a little over $3 million.

Sramana Mitra: So you bring another $5 million worth of revenue into the company in the next year or so.

Atul Jain: Correct. It was all recurring revenue also, so it was not something that was one time. We got a good team of people. They had a very good technical team in Rochester. We got an office and a bunch of people in Rochester. We consolidated our position and became the clear industry leader in telecom cost management.

We had just begun to go down the path of building an analytics solution on top of very large volumes of CDRs. We might have been able to deliver it on our own, but with some of the additional expertise that we gained from this acquisition, it became a whole lot easier. That analytic solution ended up becoming our growth engine. We were able to sell to a couple more clients.  It was a large ticket item. We would typically sell it on a monthly fee of several hundred thousand dollars a month. It was on a very large data warehouse appliance. I don’t know if you recall a company by the name of Data Allegro?

Sramana Mitra: No.

Atul Jain: Once upon a time, there was Teradata. The first competitor to Teradata was Netezza. Then there was another company that was coming up by the name of Data Allegro that eventually Microsoft bought and destroyed. We were the first customer of Data Allegro and we built this Data Allegro-based solution. Today, a lot of our data warehousing work is done on top of the Netezza platform. We built the solution and it was hundreds and hundreds of terabytes of data. It was a small number of clients, but a high-value added solution.

Sramana Mitra: What was the analytics application that you were focused on?

Atul Jain: We were focusing on fraud detection. We were doing certain amount of usage cost analysis and certain amount of margin management. It was margin, revenue leakage, fraud detection, and a certain amount of cost management. We built the solution and we were able to sell it on a hosted basis. We bought the hardware and charged them a monthly fee for a combination of the hardware and the software. We even ran it on our own data center.

Sramana Mitra: Did this product go into your existing telecom customer base?

Atul Jain: Yes.

Sramana Mitra: It was basically upselling into your existing customer base several hundred thousand a month kind of product.

Atul Jain: Correct.

Sramana Mitra: Fantastic product strategy!

Atul Jain: Some of it is luck and some of it is taking some chances. I had to make a half a million dollar bet on buying an appliance to do a proof of concept before we got the sales. In those days, half a million dollars for us was a lot of money but we made the bet. We made that bet and bought the appliance. We did a proof of concept and sold it to the client. After doing the proof of concept, it took another six to nine months to close the deal. The deal got us onto the path of doing analytics. That began to grow that business. Now with one acquisition under our belt, some organic growth, and some new innovation, we were feeling pretty good. We had done a good job of integrating the first acquired company. So we thought we’ll do more acquisitions.

This segment is part 4 in the series : Bootstrapping a $175 Million Business with Services: TEOCO CEO Atul Jain
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