We’re always impressed by entrepreneurs who manage to build sizeable companies without outside capital. Read how Cleverbridge has maneuvered to $40 million in revenue and doesn’t want to deal with venture capital and private equity.
Sramana Mitra: Let’s start at the beginning of your story. Where are you from? Where were you born and raised? What kind of background?
Christian Blume: I was born in Cologne, Germany. I moved over to the US when I was seven years old. I stayed for two years in Detroit. Then, I moved back to Germany again for a couple of years. When I was 15, I moved to London and did my International Baccalaureate over there. Then I moved back to Germany again and did my apprenticeship as a car mechanic. I then went to study Economics and went to an asset management company based out of Frankfurt, which was addressing high net worth individuals who needed investment opportunities. I was part of an advisory team there before I was tasked by my General Manager to move to the Internet in 1998. That was when everything got really important. Everybody tried to attach a .com to the ending of their company name and that made them an Internet company. I was asked to actually start a subsidiary focused on individuals who were looking at running their portfolio online and administrating it. This was when I actually got in touch with e-commerce with a company called Element Five, which was acquired in 2004 by Digital River out of the US. That gave us the opportunity to start Cleverbridge at that time.
Sramana Mitra: Can you put this in a chronological format in terms of what calendar year we are talking about?
Christian Blume: In 1998, I finished my thesis at the university. I then moved on into the asset management company and stayed there until 2000. In 2000, I started working as the lead for product management and business development at Element Five. Element Five got acquired in 2004 by Digital River. I was part of the integration team, so I moved from Germany over to Minneapolis and helped Digital River integrate the properties that they had acquired. This was also the time that I realized that there is an opportunity for some people to actually start a company that would help mitigate this unhealthy consolidation as I thought it was. That’s the reason why I terminated my engagement with Digital River and moved back to Germany. I took on the opportunity to see how I could start a company with some fellow colleagues.
Sramana Mitra: In 2005, you moved back to Germany. What were you thinking in terms of what your observations or analysis of the market was? Where did you think the opportunity was? What was the process of coming up with what would be that idea that you would be working on?
Christian Blume: I have to go back a little bit in history. Digital River has always been the 800-pound gorilla in the online software distribution market. They had a first mover advantage. If I’m not mistaken, they actually went public in 1998. They got a lot of money into their bank account, which gave them a lot of opportunity to acquire different properties out there that were doing or offering similar services as they were offering. Throughout the years since 1998 until 2004, I think they acquired at least 10 different shareware services that were offering to sell products over the Internet to an international community. In 2004, Element Five was one of the strongest competitors in the market. We were working with some really good brand names at that time. We also had the opportunity of having a couple of shots at some of the bigger clients that Digital River was also servicing. This was also the time that the acquisition happened. This really took, in my opinion, one of the last players off the market that was focusing on the niche e-commerce market of software products.
When I actually moved over to the US to help with the integration, it became obvious to me that literally a monopolyhad been established due to the fact that Digital River was capable of spending quite a lot of money in order to acquire different assets in the market. This was also where I said, “If there’s a monopoly, it means that there’s not really a lot of competition. This would be unhealthy.” This was the triggering piece where I said, “If this is truly unhealthy, then there is an opportunity for somebody else to start off in this market.” This is how the idea of Cleverbridge was born. This is right at the beginning of 2005 after I had left the company. I decided, “It’s probably better if I try and get the right people together and start something by myself as opposed to looking around for another job.”