Scaling to Profitability with $20 Million in Venture Capital: CloudShare CEO Zvi Guterman (Part 4)

Sramana Mitra: Let’s get back to the story. How much did your raise from Sequoia and when was that?

Zvi Guterman: In early 2008, we raised $5 million. This was our A round. Later on, we did another $10 million. Later we added another $10 million.

Sramana Mitra: In terms of customer acquisition and customer traction, when did you get the feeling that you had product-market fit and that you were able to accelerate the adoption of your technology? Where in this continuum did you feel that you’ve got it?

Zvi Guterman: For me, it was a combination of getting some confidence with customers. Still enterprise sales still may be three to six months but we knew that. The other time that really helped my confidence was actually pricing. I hired a seasoned VP of Sales. My intuition was discounts and making a lot of pitches. She said to me, “No. We bring something very innovative. It’s very different. You need to price it a little bit higher.” She was right.

Sramana Mitra: I don’t believe in discounting. There’s a right price point for things that deliver enough ROI. You can work through all those calculations and get a sense of what is the market going to tolerate. Once you get that, I really don’t believe in pricing things too low. If there’s value, people should understand that value.

Zvi Guterman: I agree. That was definitely one of my lessons during this journey. Initial customers were there but as people got confident very quickly, they were pushing for long-term contracts. It started with one year and, very quickly, went to multi-year contracts. That was another kind of confidence.

Sramana Mitra: What were your average deal sizes?

Zvi Guterman: Low six digits.

Sramana Mitra: It’s a direct sales process?

Zvi Guterman: Yes.

Sramana Mitra: Where are you today? We are in 2017. It’s been quite a while that you’ve been in the market. How far along are you?

Zvi Guterman: The company is growing. One of the nice milestones for us is, we actually became profitable. It’s one thing that you really don’t think about when you start the journey. We have customers in over 100 countries. We were not doing any marketing activity in any other language other than English. Right now, we are starting to do more. We added data centers in Asia-Pacific. We added another one in Europe. That’s one important avenue for us – global growth.

Sramana Mitra: What kind of revenue range are you at right now?

Zvi Guterman: We don’t share exact numbers but we’re still a small company. We’re still under $25 million.

Sramana Mitra: Is there anything else that you want to add to the story?

Zvi Guterman: Many times what entrepreneurs need or lack is understanding ventures. For example, Sequoia is an amazing VC. They’re interested in unicorns. You may have a wonderful idea but it’s not a unicorn.

Sramana Mitra: Right. You don’t have to build a unicorn to be successful. There are many $5 million ideas. If you build a profitable $5 million business, that’s still success.

Zvi Guterman: That voice is still not dominant enough.

Sramana Mitra: The whole industry is obsessed with venture financing. It’s a really unhealthy phenomenon. I really enjoyed speaking with you.

This segment is part 4 in the series : Scaling to Profitability with $20 Million in Venture Capital: CloudShare CEO Zvi Guterman
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