Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex (Part 4)

Joel Lessem: I didn’t like the venture capital model. I sold my house to take this job. I have a wife and a child. I put too much into this to play venture casino. I’m here to make money. I don’t care how big the company is. I just want to make money and build a business. I don’t mind if it’s not a thousand-employee business. It can be a 50 to 100- employee business. The more I talked to ventures and understood their business model, the more I realized that this is a very high-risk business because they have a very limited timeline. Most businesses take many years, if not decades, to build a solid company. If you go slowly, you can make wise operating choices versus Hail Marys. I said, “No, I’m not going to do that.” We were very good at forecasting. I said, “I’m going to get to cash positive in 18 months and I still have $300,000 left in the bank.” What happened was I got to cash positive in 17 months. Then, I began investing heavily in the product. We were about 25 to 30 people.

Sramana Mitra: What was the revenue level at which you got to cash positive?

Joel Lessem: About $3 million.

Sramana Mitra: That happened in 2009?

Joel Lessem: Spring of 2010. Five years ago. We just kept reinvesting everything into the business and growing. We are 80 employees now. We’re a private company. Put it this way, I have 30% growth and 20% free cash flow. If you add them together, you get 50%. If I have 50% growth, I’m happy with zero profit. We really think about the business in terms of a combination of growth and profitability. We have 105% revenue retention with existing customers. It’s a highly recurring business. We have over 1,500 customers diversified over a whole host of industries and across many countries.

Sramana Mitra: In the last five years, what are some of the key strategic moves that you have made that have enabled you to achieve growth?

Joel Lessem: Whether they be shareholders or other managers, I have had a lot of people try to say, “Let’s try something big and different. We’re only growing by $1 million a year.” I say, “No, we have to stay laser-focused. We are going to be really good at one thing until we get to $20 million in revenue.” People say, “But you didn’t make a choice.” I did make a choice, to just focus on operational excellence. I look at my competitors who are not making money. There’s one public company who doesn’t make money. The feedback we get from outsiders who come back is that, “Wow! You guys have incredible internal operating systems.” We have not only processes and procedures, but also the technology we’ve leveraged internally for efficiency and business intelligence. I’m a very data-driven person. For me, information systems are very critical in making decisions. I’m the opposite of the stereotypical entrepreneur that you hear about in the media who has an inspiration and is all over the place.

Sramana Mitra: The world that we inhabit is full of metrics-driven entrepreneurs. I operate out of Silicon Valley.

Joel Lessem: I’m one of those guys. I’m a completely metric-driven entrepreneur. I also became interested in HR because I realized that we were getting up towards 50 employees. I’m only 2% of the equation here. It’s all about empowering and leveraging the other 98% of the company because we are the sum of parts. I am just a piece of the equation here. That, obviously, is good for retention. Also when you make forecasts and you hit your targets, people have a lot of confidence inside and outside the company in how you operate.

This segment is part 4 in the series : Scaling with Angel Money Only in Canada: Joel Lessem, CEO of Firmex
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