Building a High Growth SaaS Company from Los Angeles: Nick Hedges, CEO of Velocify (Part 4)

Sramana Mitra: What happens next?

Nick Hedges: I joined the company because I was really interested in the data that they were collecting and the flexibility of the platform that they had built. Essentially, they were collecting closed-loop data so these are data from the point that the lead was created to the point that they converted into customers, and every interaction that happened in between. I said, “That’s a fascinating and relatively unique dataset that we can use to really help sales teams be much more effective. In my interview, I said, “One thing that you should think about is if you mined your data, could you tell the sales team what would be the right number of calls to make and what the spacing of those calls were? If you can, then I suspect that you’re going to be able to help sales teams significantly increase their results.”

At that time, we had about five million leads with all of their outcomes. I thought there was a huge opportunity there that was relatively untapped. I also saw that the platform was flexible. They hadn’t made any hard decisions. There was nothing really specific about the mortgage industry that they had built into what they had done. It was a platform that allowed you to define workflow and rules about what leads are assigned to which people. The company that was using the software controlled everything the software did through the interface. I thought that that was an opportunity.

The reason I thought it was an opportunity was because the mortgage industry at the end of 2007 imploded. The company was actually in a crisis. Even though they had raised funding in Q3 of 2007, the company was pretty much in crisis when I joined. They had gone from $4 million the year before to just over a $2 million run rate. When I came in, the first thing that I needed to help them do was to diversify their customer portfolio because it was impossible to sell into the mortgage industry and their churn was off the charts because companies were just going out of business. That’s what I helped them do to start off with.

First of all, we went into an industry that isn’t very glamorous but was a hedge to the mortgage industry, which was the consumer debt industry. That was the immediate hedge to transform some of the attrition that they were facing in the mortgage industry. Then we built a more solid foundation by entering the insurance industry—auto, homes, and commercial. It did phenomenally well there. We then moved to the for-profit education space as well. We really succeeded well in each of those verticals. Within a year, we went from the $2 million run rate to $4 million in 2008 by really diversifying our portfolio.

Sramana Mitra: What was the product?

Nick Hedges: The product was a fairly simple lead management capability. What it did was allow you to connect with a variety of different lead sources—companies that were generating leads and had figured out how to do SEM and email retargeting in order to generate leads. It allowed you to connect to those, receive the leads electronically, and then to devise rules that determine to whom each lead should go to and provide a list of those leads for each user of the system so they can work through that list.

This segment is part 4 in the series : Building a High Growth SaaS Company from Los Angeles: Nick Hedges, CEO of Velocify
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