How to Manage A Successful Pivot: Bullhorn CEO Art Papas (Part 6)

Sramana Mitra: In a nutshell, you basically pivoted to a vertical CRM strategy and then started building out more and more verticals and developing work flow in your product for those verticals. You went after mid-market companies in each of those verticals.

Art Papas: We did. We have a lot of tiny customers and then we also have a lot of mid-market customers. Being SaaS, you can service a one-person company. You can service the person who wants to be on their own or you could service a mid-market company. Being vertically-focused allowed us to go up-market. We landed our first Fortune 500 account back in 2005. We got traction because we had all this vertically-focused workflow. We were able to get traction with these very large players early on. That also has been a key to the success – being able to go all the way up and down. We applied that across multiple verticals as we grew.

Sramana Mitra: Let’s come back to 2008. You raised money from Highland Capital and bought out the early investors. You were basically growing really well at that point. What happens next?

Art Papas: The funny thing about the Highland and the General Catalyst deal was that we thought we were going to have to burn money. What I learned is that vertically-focused SaaS companies are different from horizontal plays. For a horizontal play, you have to just burn money to grow. We were able to grow through that investment period without burning half the money that we took. For two years, we went into the red. It was really hard actually because there’s a point at which it’s hard to hire ahead of demand. We lost maybe 10% one year and then 5% the next. Then we found ourselves back to profitability but we’re still growing 40% a year. It was an interesting dynamics.

In a vertical market, your product spreads faster by word of mouth than it would by traditional advertising marketing approaches. Even classic content marketing is pretty efficient. It works very well in a vertical. Even as we open up new verticals, we were able to do so pretty cost-effectively. Today, we’re still growing really quickly. We’re still very profitable.

Sramana Mitra: What’s the scale right now? Where are you revenue-wise?

Art Papas: We’ll be just under a $100 million this year.

Sramana Mitra: What are your thoughts on going public? What’s the thought process about the next phase of the business?

Art Papas: We were bought by Vista Equity Partners in 2012. They came along and they loved the fact that we were a profitable vertically-focused SaaS player. They bought out Highland Capital and General Catalyst and some of the early angels. That was full control buyout. Their thesis was that we could grow aggressively and remain slightly profitable but not really drive huge profit margins. Vista was very progressive and they’re the only private equity buyers who understood that you have to invest in growth.

We planned that we would spend the next three to five years getting ready for a public exit. Now, we’re three years in and it’s gone exceedingly well. We’re bigger than we thought we would be at this point. What we’re now thinking is that we could go public tomorrow if we wanted to. We’re looking at it and saying, “It’s nice to be private.” I don’t know what the market’s going to be doing next year or the year after but I think that SaaS is such a huge trend. We’re not worried that the IPO window will close.

This segment is part 6 in the series : How to Manage A Successful Pivot: Bullhorn CEO Art Papas
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