Building a Global Enterprise Software Company from Europe: Gero Decker, CEO of Signavio (Part 4)

Sramana Mitra: This first customer went through. You got paid. What happens next?

Gero Decker: Then we started building a real organization. We hired our first sales guy. We went from a company that was four people with interns to 15 people over the course of 12 months. The interesting that we had for me as an entrepreneur is we had a lot of interest in what we were doing. Bloggers wrote a lot about us. Industry analysts wrote about us.

We had a lot of inbound interest, but nobody was buying. We thought that it was a strange situation to be in. You have all of these conversations but nobody signs. We later discovered that we were seeing the impact of the financial crisis. This was 2009 and 2010. IT budgets were slashed. For the things that were not absolutely necessary for the business, they were simply not spending money on it, which was great for us because we built quite a wave of interest.

When the IT budgets came back up in summer of 2010, this was the first time that we could see a reasonable amount of traction in revenue. While 2009 was mostly this one customer, the next year was where we could find customers in the dozens.

Sramana Mitra: What became the customer acquisition strategy at this stage of your evolution?

Gero Decker: For the first six years, we only lived off of inbound leads. People found us through different channels. Back in the very early days, the most important channel for us was referrals through independent consultants. We were working with quite a number of freelance consultants who loved our technology because it helped them provide a much better service to their customer. They started evangelizing this to the customers where they were doing their projects.

Out of the first 50 customers, 30 or 40 came through recommendations from partners. Then over time, classic marketing channels hit. Through our webinars and online content, people would find our trial. Then during that time, we would engage and start the sales cycle with them. For the first six years way into 2016, we were living on an inbound lead generation model.

Sramana Mitra: What was the clip at which you were getting customers? If you talk about all of 2009 and then 2010, how many customers were you working with?

Gero Decker: 2009 was four of five. In 2010, it was roughly 50. We made $800,000. In the prior year, it was probably $200,000. That was quite a big jump. From there, we typically had growth rates in the range of 60% in the low end and 100% in the high end.

Sramana Mitra: When did you hit a million?

Gero Decker: In 2011, we had $1.5 million. In the beginning, we still had a hybrid model between perpetual licenses and subscription. In the early days, many customers went for the perpetual model. Only over time did we actually shift it to the subscription model. Only since 2016 did we switch to a subscription-only revenue model.

Sramana Mitra: Until 2015 when you were selling perpetual licenses, does that mean you were getting hundreds of thousand of dollars upfront on a milestone basis.

Gero Decker: Depends on the deal size. For the biggest deals we sign on the perpetual side, it would go into seven-digit numbers. A more typical deal size would be $50,000 to $80,000.

Sramana Mitra: In 2011, you hit a million. What was the trajectory after that?

Gero Decker: We continued to grow between 60% and 100%.

Sramana Mitra: What about customer acquisition strategy? At what point did that switch from being inbound to more proactive and more repeatable strategy that you put together?

Gero Decker: It only changed in early 2016. What had happened was that in late 2015, we took on investment for the first time. We did our Series A.

Sramana Mitra: What revenue did you go into raising Series A with?

Gero Decker: That was roughly $7 million from an ARR basis.

Sramana Mitra: But you only switched to subscription revenue in 2016.

Gero Decker: From a recognized revenue point of view, it was something like $10 million.

Sramana Mitra: But with the perpetual business model.

Gero Decker: With a hybrid model.

This segment is part 4 in the series : Building a Global Enterprise Software Company from Europe: Gero Decker, CEO of Signavio
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