Scaling a Robust Enterprise Software Company from Chicago: FourKites CEO Matthew Elenjickal (Part 3)

Sramana Mitra: What is the process of customer acquisition? Where you reaching out to these customers? Were they reaching out to you? What was the inbound and outbound? What was the go-to-market strategy?

Matthew Elenjickal: For those early days, it was still outbound. You go through your Rolodex and some of the companies you work with in the past. You reach out to them and many of them saw the value and signed up. It was mostly outbound, and some inbound of course. But I would say 80% of that was outbound.

Sramana Mitra: This is a sales cycle. How long did it take you to close these customers? Sounds like you’re going after very large food companies. What was the sales cycle?

Matthew Elenjickal: It’s anywhere from four to eight months. An average of six months. That’s what we’re seeing.

Sramana Mitra: When you went into raising the series A, how many of these had you closed?

Matthew Elenjickal: Less than 10.

Sramana Mitra: But 10 is a good number to go into series A with. Especially with the size of customers you got. That’s very good. What kind of a pipeline did you have while you were doing the series A process?

Matthew Elenjickal: Our revenue was less than $2 million dollars when we entered the series A. I would say there was $20 million to $25 million in the pipeline that we had identified at that point.

Sramana Mitra: You executed very well. If you look at the benchmarks of your stage, you executed excellently. You should be very proud.

Matthew Elenjickal: One more thing we did is, we raised a bit more. We raised another million dollars around the end of 2015. Ultimately, we won the lawsuit. We had a bridge round from insiders and Hyde Park as well.

Sramana Mitra: What are some other major strategic moves from that period that they’re discussing after series A?

Matthew Elenjickal: We could have gone into multiple directions. But we decided to focus only on providing the tracking platform – the very best tracking. Having that focus on one product and doing it very well was a strategic thing we did.

Second factor was who we went after. There are tons of companies that we can sell to, but we made a choice to go after the largest of the largest companies, primarily because they have a lot of pull in the market and they can influence others.

Every vertical that we are in right now, whether it is food and beverage, retail, manufacturing, or oil and gas, our goal is to start with the top companies so they can push it down. That will create a network effect. So that is our strategic move.

Finally, we over-hired early on because we knew that the demand is out there. It’s very clear after talking and seeing the market. We knew it was just a matter of time before we scaled up. So we over-hired early on to keep up with the expected growth.

That proved to be correct. We were able to scale much faster than some of the new players or competitors in the market. Many of them faltered because they couldn’t scale. Those are some of the things we did early on in 2015 to 2016.

Sramana Mitra: Productwise, who were you competing with?

Matthew Elenjickal: We have two primary competitors – MacroPoint who sued us, and then 10-4 Systems. They both sold the companies to bigger companies right now. They’re part of public companies. We’re the only independent player left in the space.

Sramana Mitra: Who bought those companies? Who are you competing with today?

Matthew Elenjickal: MacroPoint was bought by a Canadian public company called Descartes. 10-4 is part of a public company called Trimble down in California.

Sramana Mitra: What happened in 2017? What are the major happenings in 2017?

Matthew Elenjickal: 2017 was our execution based on the series A money. We raised $13.5 million in 2016. Clearly, we had to deploy the capital. So 2017 was more of adding more customers, growing the team, and really showing traction.

Sramana Mitra: You were selling direct? Not through the channel.

Matthew Elenjickal: Yes.

Sramana Mitra: So you needed to build a direct channel.

Matthew Elenjickal: Yes, the typical enterprise sales.

Sramana Mitra: What was happening to the average deal sizes at this point?

Matthew Elenjickal: It was going up because we were adding more products to the portfolio. So we could land with more products. The average deal was going up to a million dollars in 2017.

Sramana Mitra: How much did you do in 2017? How many customers? What kind of revenue levels did you reach?

Matthew Elenjickal: Less than $10 million maybe, and maybe less than 60 customers.

Sramana Mitra: 60 customers with two rounds of financing – The Hyde Park round and then the Bain Capital led series A.

Matthew Elenjickal: Yes.

Sramana Mitra: So in 2017, you’ve got about 60 customers. The average deal size has significantly pushed up. You were operating only in North America or were you doing global as well?

Matthew Elenjickal: That time in 2017, we were only in North America.

Sramana Mitra: What happens in 2018?

Matthew Elenjickal: We raised a round in the beginning of 2018. It was $35 million from August Capital. We grew 3x in 2018. We had more customers and more people. We ended the year with almost 200 people.

We also expanded internationally in 2018. We’re live in Europe, South Africa, and South America. 2018 was clearly a big expansion for us. Our customer base has doubled. It’s close to 120 to 130 customers.

Sramana Mitra: You said you started in the food vertical and you were moving into CPG. What was happening to your vertical penetration?

Matthew Elenjickal: The good thing is the platform could be used in any vertical. If you’re shipping products from point A to point B, then you can use FourKites.

Because we started in the food and beverage sector, we have a significant penetration there including, retail and CPG, oil and gas, and manufacturing. These are all the different verticals that we are active in.

This segment is part 3 in the series : Scaling a Robust Enterprise Software Company from Chicago: FourKites CEO Matthew Elenjickal
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