Bootstrapping From Germany: Cleverbridge CEO Christian Blume (Part 7)

Sramana Mitra: How does your work play in to the work of the SaaS providers like Aria? They are managing the online SaaS billing.

Christian Blume: They’re managing a broader spectrum in a much stronger niche market. What do I mean by that? They go into any type of service that could be a subscription, billable type of environment. Whether this is your utility bill or access to a cloud service such as a Box or a Dropbox, they can do all of that. What they actually offer is a very small subset of the solution that we actually have.

You are talking about an Aria system. They’re very specific and concrete around the subscription facilities and the engines that they offer around it. What they’re typically missing is any type of invoicing that’s associated with it. If you want to work with that kind of solution, you need to manage your own payment methods. You need to have your own fraud management and understand how international fraud has an impact on any type of solution that you have in place. You need to set up all of these different aspects to it in addition to the solution that they offer.

Sramana Mitra: Do you position yourself as complementary to the Arias of the world?

Christian Blume: They have a certain piece that they’re working with. We have another piece. We offer a broader spectrum. There are actually cases where we’re working together with those people.

Sramana Mitra: That was my next question. Do you have joint customers?

Christian Blume: Yes.

Sramana Mitra: Do you have customers where you’re replacing them?

Christian Blume: It goes into all sorts of direction.

Sramana Mitra: How do you think about your growth potential today in terms of market that is open today? How large is that market? How do you assess that market?

Christian Blume: To me, the question really is, “How large is the market today and how large will it be in the future?” There are a couple of aspects that are happening. First of all, there are regional aspects that are still opening up. There are still markets that are untapped with regards to actually being able to sell products into these markets. At least, at the level where we would like to see. If you take a look at China, the amount of software that they’re consuming is completely different from the US market. There’s a huge opportunity on the regional market side.

Sramana Mitra: Are you in China already?

Christian Blume: We’re in China as well. The other thing that we’re seeing is that the market is expanding because we have additional players moving into the market. By additional players, I mean companies that have been reluctant to go direct to consumer or direct to business. They are realizing that, “This makes a lot of sense for a product which needs a little bit more consultancy.” That market is opening up. There is a lot of growth there. Especially on the B2B side, there’s still a ton of opportunity which is untapped.

When it comes to market sizing, it’s very difficult to say anything. Here’s the thing. If you look at what all those research firms offer as information, the market seems to be sheer endless almost. We’re talking of billion and billions of dollars. If you look at some of the very large players like Microsoft that has a lot of consumer business, they’re actually working with outsourced e-commerce providers as well. If you take a look at what they’re selling online today, that’s a couple of billion dollars that they’re doing online.

I’m not servicing them at this moment in time. Do I want to service them? Probably yes at the time when my company has the compelling solution that we can offer to those types of companies and they’re ready to make the change. Whether we’ll be able to take this into a $400 million business? It’s truly possible with the market opportunity that is being offered.

Sramana Mitra: Do you want to continue to remain a private company?

Christian Blume: I’m trying to understand what would be the upside for me if I were to do it any differently. I’m having a hard time. If I would take the organization public at this time, what would be the advantage? We would have additional money. If there’s something that we would like to buy, is there an M&A opportunity for us? We asked ourselves those questions in the executive team. We always come to the conclusion of no. We don’t have any reason to do this.

Would I exclude this for the future of Cleverbridge? Definitely not, because there might be an opportunity where you might want to say, “If we now have those additional $30 million, we could enter a different vertical.” Right now, we don’t want to go into a different vertical. Maybe five years down the road, we might want to enter a different vertical because the dynamics of the market may have shifted again. I don’t want to close the door but right now, it probably doesn’t make that much sense.

Sramana Mitra: You guys have been at this have been for 10 years. If you want to take some money off the table, you could get some investors in. The thing that you have to watch is that you don’t get forced into an exit buy. If you enjoy what you’re doing, you could be running and building this company for another 10 or 20 years without being forced into a venture capital timeline.

Christian Blume: You’re putting in exactly in the words that I couldn’t have put it in any better. This is where all of a sudden, you’re at risk of handling the steering wheel to somebody else.

Sramana Mitra: Great. Thank you for that wonderful conversation.

This segment is part 7 in the series : Bootstrapping From Germany: Cleverbridge CEO Christian Blume
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