Multiple Pivots, Taking on Giants, to Over $100 Million in Revenue: Matthew Calkins, CEO of Appian (Part 2)

Sramana Mitra: Let’s pause for a moment. I want to ask a few questions about your survival. Were you bootstrapping this company or were you funded? How did you manage to survive this pivot financially?

Matthew Calkins: Our cash flow was quite strong. We were running a services business. We were doing a little bit of intellectual property, but mostly we were just developing that and selling it on the cheap in order to make money on services. We were also doing a little bit of analyst work in order to establish our bonafide as thought leaders in personalization. We had the Appian personalization report that sold for $20 to $30. We sold a few copies of it. It made us look like we were the thought leaders. Our cost structure was very low.

Sramana Mitra: Services means that, at least, you had cash coming in. When you pivoted, it was more of services work, right? The portal was more services, right?

Matthew Calkins: I would have loved to start in software but I didn’t want to take any money.

Sramana Mitra: We are huge believers in bootstrapping product companies using services. It’s a very smart way to get going because of many reasons that you have experienced.

Matthew Calkins: You build expertise. You develop credibility. Particularly if you’re young, it gives you an opportunity to find your feet.

Sramana Mitra: Exactly. I think that’s actually a very smart way to get going. What kinds of companies were you able to do the portal project for?

Matthew Calkins: We did a few. The Army was our most impressive success. We were brought in as an experimental program in 2001 prior to 9/11. The Army was interested in ways to centralize information and make it accessible across different organization boundaries. We were brought in to do a relatively small project.

After 9/11, the Army decided that this was no side project. That, in fact, it was essential and that the old barriers that used to separate divisions were no longer acceptable. An order came down from the General that every soldier must have an account on the chosen platform. Astonishingly, the chosen platform was us.

Sramana Mitra: What was the killer use case? What were they trying to do? Why should the soldiers all have personal accounts?

Matthew Calkins: They were orders. Orders used to be redundant and out of date. They would save them as enclosures. We made a central place for communications so that the official version could be updated and authoritative. Email was a disaster. If you were at a base, your email address was [your name]@[name of base].army.mil. If you switched bases, you would lose your email address. This was not good for communication. There had to be more centralization.

Sramana Mitra: The portal’s killer purpose was communication.

Matthew Calkins: It was, slightly, in defiance of what people expect from a portal and what the portal industry is set up to do. That isn’t even what we were intending to do but we were used for it in this case. It was a great success, in that it’s one of the most widely used applications in the history of the Army. It was a limited financial success for us. I sold the entire rights to this for $195,000.

Sramana Mitra: Oh, wow. It could have gone for a lot more than that.

Matthew Calkins: They got their money’s worth for it. I sold it for peanuts because I had meant to make it up in services. The contract was the pairing. This application was logged into more than two billion times. The Army bought it for $195,000. Still, it made a good reference.

Sramana Mitra: What were you able to get based on that reference?

Matthew Calkins: I don’t know that it led to anything directly. We were known for it in Washington but we weren’t allowed to put it on our website.

Sramana Mitra: Were you able to get other government agencies?

Matthew Calkins: Yes, we already had. We dug into government, in earnest, after the tech bubble burst and we needed reliable payers. We started work with Housing Urban Development and Treasury. We had a few accounts in the government back then.

This segment is part 2 in the series : Multiple Pivots, Taking on Giants, to Over $100 Million in Revenue: Matthew Calkins, CEO of Appian
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