Multiple Pivots, Taking on Giants, to Over $100 Million in Revenue: Matthew Calkins, CEO of Appian (Part 7)

Sramana Mitra: The competitors who went away, were you winning their customers?

Matthew Calkins: We were winning the deals that they attempted to compete in.

Sramana Mitra: But people were not switching necessarily.

Matthew Calkins: By and large, whoever has done that installation doesn’t want to do it again. They’re going to hang on to whatever they’ve got until it dies on its feet. We weren’t able to go back to lost deals and win them the second time around, at least not in the near term. We were stronger proportionally in the new deals. They had this turmoil going on.

Sramana Mitra: We are talking 2012?

Matthew Calkins: Yes.

Sramana Mitra: What happens next?

Matthew Calkins: We’re still innovating. We were becoming more sophisticated. Our processes get better. Our management team keeps improving. I still do every interview. For about 15 years, I did every interview. You couldn’t get a job at Appian without talking to me. Sometimes it happens that if I’m out of the office, they will not hold the candidate. They will send the candidate to another founder or someone with whom we have a great deal of trust. That person makes the final decision. I’ve had a great deal of influence on the composition of the firm.

We’ve built the company to accentuate the strength of personnel. Our technology team, for example, is based entirely here. It’s an elite team working completely together in teams that can sort, remix, swap, and consult with each other. We’ve done all we can to maximize the actualization of the great resources we find. As a result, our team is still able to out-innovate. We’ve found great people and we’ve done everything we can to actualize them. The corporate structure is still very meritocratic. We love to hear discordant voices. We encourage that. Having people together in a maximum bandwidth situation is ideal for that.

Sramana Mitra: Your team is mostly in the Washington DC area?

Matthew Calkins: Yes. During the period from 2012 till now, we’ve had substantial offices in London and minor offices in other European capitals, Melbourne, and Brisbane.

Sramana Mitra: Why certain emphasis in Australia?

Matthew Calkins: It has a few reasons. One is we’d like to cover the globe from a service availability standpoint. There are certain time zones you just like to have representation in. It could be Australia, China, or Japan if you would like to have a base in that part of the world. For us, Australia was the best choice out of those because of the language familiarity and similar profile for services wages which is much lower in Mainland Asia than it is in Australia. Australia is almost a Northern European country when it comes to IT consulting. That was beneficial for us. We were also fortunate with leadership. We found a very talented woman to run the Australia operation. That got a bit of a jumpstart.

Sramana Mitra: Where are you revenue-wise?

Matthew Calkins: I don’t believe we’ve publicized that.

Sramana Mitra: Have you crossed $50 million?

Matthew Calkins: I can tell you that we’re over $100 million.

Sramana Mitra: Did you raise any other financing besides that $10 million that you discussed earlier?

Matthew Calkins: We did a Series B but the Series B did not accrue to Appian. It was a secondary round.

Sramana Mitra: So you took the original investors out in the Series B?

Matthew Calkins: Nobody got taken out. Everyone diversified a little bit. We allow all of our employees to diversify with their mature options and we allow the founders to diversify. Most of it was actually me.

Sramana Mitra: What is the mix in the product versus services? Are you still largely services or has the mix changed?

Matthew Calkins: Now, it’s 50/50. That’s in spite of the fact that services are recognized right away as performed. We’ve shifted to a term license model, which is to say we’ve shifted our license revenue into the future. Bookings-wise, we’re favouring licenses. Revenue-wise, it’s about equal.

Sramana Mitra: So you’re not a SaaS model company. You’re doing license revenue.

Matthew Calkins: That’s what I meant. I meant it interchangeably. We are a SaaS company. 98% of our license sales are subscription sales.

Sramana Mitra: We think of subscription sales as product revenue. When I talk about professional services, I’m talking about human beings.

Matthew Calkins: I’m sorry. I’m being unclear. Half of our revenue is license revenue. By which, I mean subscription. The other half is services as in professional services.

Sramana Mitra: Are you thinking of taking the company public anytime soon?

Matthew Calkins: I’m open to the possibility.

Sramana Mitra: Very interesting story. Thank you for sharing. Nice talking to you.

This segment is part 7 in the series : Multiple Pivots, Taking on Giants, to Over $100 Million in Revenue: Matthew Calkins, CEO of Appian
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