Capital Efficient Entrepreneurship: Ephesoft Founder Ike Kavas (Part 3)

Sramana Mitra: What happens in 2012?

Ike Kavas: We got a few more sales people. We continue to expand in every location in America. If I remember correctly, our revenues went up to $550,000 that year. From there, we went to $1.1 million. The next year, it was $2.4 million.

Sramana Mitra: So $2.4 million in 2014?

Ike Kavas: Yes.

Sramana Mitra: Before we go beyond 2014, can you talk a bit about how you were acquiring customers? How were you finding customers?

Ike Kavas: We approached it through networking. All the people we hired for sales were from this industry. We showed them what a technological improvement we’ve done for the stuff they’ve used. They knew about other businesses like resellers or system integrators that sold similar products. As we convinced them that our product is superior, they started to bring us customers.

Sramana Mitra: Reseller channel was a big strategy for you to get to customers?

Ike Kavas: Absolutely.

Sramana Mitra: Is that your primary channel?

Ike Kavas: Yes.

Sramana Mitra: Excellent. Was there a particular spec in the kinds of resellers you were looking for?

Ike Kavas: It’s actually the network of people we employed. They already knew most of them. We knew the business problems that they were solving, so it was easy to find those type of partners. Early on, we went to companies like Al Fresco, a repository company. We knew they had resellers that could use our software. Besides our network, we also found new opportunities that is related to our industry. We told them about the technology and they saw the need.

One thing I have to mention is it was very important for me to make sure that we are not out-innovated by someone else. My nightmare was that. We set out a mandate that every two years, we were going to innovate something new. We were going to bring something new to the table. Every two years, we introduce brand new ideas and technologies to complement our product. There were a lot of customers and partners who appreciated that. We were putting everything we’ve earned back into the company in the technology area.

Sramana Mitra: You mentioned that you got to $2.4 million in 2014. What happened beyond 2014?

Ike Kavas: We kept growing. We opened an office in London first. We continued to expand our operations in the United States. We opened several offices so we can help government with their document processing as well. From $2.4 million, we got to $5.5 million and then $6.5 million. Then $9 million. Last year, it was $12 million.

Sramana Mitra: Let me see if I got this right. You were at $5.5 million in 2015, $6.4 million in 2016?

Ike Kavas: No. We finished at $12 million in 2016. 2015 was $6.5 million. Before that was $5.2 exactly. 2013 was $2.4 million.

Sramana Mitra: You’ve done all this without outside financing other than the friends and family money?

Ike Kavas: There’s one exception. In 2014, we made a partnership with Fujitsu. We sold Fujitsu a 10% stock. It wasn’t even Series A.

Sramana Mitra: How much did you bring in from that?

Ike Kavas: We brought in $3 million.

Sramana Mitra: So there’s been $3.2 million that you’ve invested and you’ve turned that into a $12 million annual revenue in 2016.

Ike Kavas: Correct.

This segment is part 3 in the series : Capital Efficient Entrepreneurship: Ephesoft Founder Ike Kavas
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