Bootstrapping to $15 Million: Ernie Bray, CEO of ACD (Part 3)

Sramana Mitra: When you were actually processing claims, what did you see that triggered this idea?

Ernie Bray: What I saw was that claims technology systems were outdated. They were just green screen technologies at that time. I’ll give you an example. When I was looking at AAA, appraisers would go out and take photographs of a car and then get those photographs developed. Then, they would have to attach them by tape on to a file. We digitize the process. We have digital photographs uploaded immediately to insurance companies. Just something as simple as that. Giving insurance companies a really good platform for that helps them become more efficient. When we started, insurance companies were still focused on paper. We even had one company in 2004 that said, “We can’t get on to the Internet. You’re going to have set access everyday.” We were right there pretty much when companies were starting to move to that digital process.

Sramana Mitra: Let’s do the next level of double-clicking. How did you get your first client? Were these large insurance companies?

Ernie Bray: No. We had to start out small. We targeted smaller companies that could utilize our efficiency. They could become case studies for us to then use as advocates. They would vouch for quality and the technology. We would show them what we had. I remember our first client was in San Diego. We met them through networking. We were going to networking meetings, and just trying to get that first client was very difficult. You have to, at the same time, understand that the first client can be difficult because they don’t necessarily trust that you can produce. Being able to back up and deliver the product is key when it’s a new product.

Sramana Mitra: What kind of clients were these that you were going after early on?

Ernie Bray: They were smaller regional type of insurance companies. These were regional companies that covered one or two different states.

Sramana Mitra: Are there a lot of these small insurance companies?

Ernie Bray: Yes, there are quite a few. There’s a lot of them out there. A lot of those companies don’t usually have the resources or the ability. A lot of the bigger competitors on the technology side don’t even try to go after these companies. We saw that as a great opportunity to go to an underserved market.

Sramana Mitra: What were the deal sizes? When you would sell to a small insurance company, what would that mean in revenue terms?

Ernie Bray: For our first year, we only did $400,000. The second year, we did $1.2 million.

Sramana Mitra: $400,000 is a very decent revenue for a bootstrapped company.

Ernie Bray: We were doing maybe $50,000 a year deal. A lot of it is based on the volume of business.

Sramana Mitra: So your pricing model was based on how many claims were being processed?

Ernie Bray: Correct. It was per claim and per file. As a CEO, you’re involved in every aspect of the business. You’re wearing multiple hats. During that time, you’re building a portfolio of companies that will become your advocates and vouch for your quality.

This segment is part 3 in the series : Bootstrapping to $15 Million: Ernie Bray, CEO of ACD
1 2 3 4 5 6