Bootstrapping a Virtualization Services Company: Chris Grandi, CEO of Abacus Group (Part 6)

Sramana Mitra: How has your revenue ramped from the 2007 time frame to 2015? Where are you now?

Chris Grandi: We’re growing over 50% per year. In year one, we started our revenue with less than a million dollars. You grow a 100% when your revenue is smaller. Our revenue is significantly bigger now but we’re still growing at more than 50%.  I actually don’t think that we can grow this company at greater than 50% because of the service levels that we have to provide. I will be very pleased if we continue to grow at 50%.

Sramana Mitra: You’re still doing it as a self-financed business?

Chris Grandi: Yes. This goes back to domain experience. Because I felt that I knew the business, I put my personal capital in. We were cash flow positive within nine months of taking our first client. At some point, I might go back and look at larger chunks of capital from private equity firms if we were potentially rolling up some other providers in the space. We’re not doing that right now.

Sramana Mitra: Is the business model you have recurring revenue? Is it professional services? What is the business model? What is the pricing model?

Chris Grandi: It’s 100% recurring revenue. Essentially, all of our clients pay us monthly retainers 30 days in advance.

Sramana Mitra: It’s a SaaS model.

Chris Grandi: Very much so, yes. That was my goal when we developed the business model.

Sramana Mitra: How many people do you have?

Chris Grandi: I think we have 85 employees. We’re on a hiring spree right now so we’ll be over a hundred soon.

Sramana Mitra: Are these people all in San Francisco?

Chris Grandi: I started this in San Francisco mainly because I live out here. However, West Coast hedge funds are more progressive in adopting new technology. Our biggest office is in New York. That’s the predominant hedge fund market. Most of our employees are in New York. Our second biggest office is in Dallas. We have a lot of the network engineers there. Then we have an office in Boston, Connecticut, and Charlotte. We’re getting ready to launch an office in London.

Sramana Mitra: To summarize, if you were to look at the last eight years of building this business, what are the key strategic moves that you’ve made to enable you to be successful?

Chris Grandi: I really lean on risk–reward. If you create a successful company, there’s a lot of reward. But how do you manage the risk? My idea about that is I want to go out and get 5 to 10 years of experience in the space and then take that risk. I still really hold to that. The other thing I tell people is when you’re starting a company, it’s harder than you think. It’s a lot of work. It’s a commitment to poverty for a number of years. The probability of success is not extremely high. There will be horrible days when you’re beating your head on the ground. The romantic notion of starting your own company wears off in about 24 hours. Then you realize that this is a long uphill climb.

Third is, it ultimately takes an element of luck. It is more than luck. If you push on something hard enough and long enough, eventually something will happen. There will be a moment and it’s out of your control, but if you capitalize on that lucky event, that will take you to the next level. That happened to us a number of times. You have to be prepared for something to change. A lot of times, that change is something lucky happening. You have to be there and ready to capitalize on it.

Sramana Mitra: Great! Thank you very much for your time.

This segment is part 6 in the series : Bootstrapping a Virtualization Services Company: Chris Grandi, CEO of Abacus Group
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