Bootstrapping Using Services to $10M: Zimit CEO James Cramer (Part 6)

Sramana Mitra: That positioning is sharp and well-defined. Does that continue to be your sweet spot?

James Cramer: It continues to be the biggest line share. It is where we focus the most. What we added that expanded our market was partnerships. We sought professional services automation platforms that targeted the same customers knowing that they don’t have our functionality. If they did, we partnered with them and added a competitive differentiation in that deal.

The one that it kicked in was with Workday. Workday does not have a quoting or pricing platform in its financial product at all. When they were competing in the market, in some deals the customer said, “Hey, I don’t want to just implement Workday and still have a bunch of spreadsheets. If we add Zimit, we have a complete story. We can go all the way to the CRM system all the way to the financials in Workday and it’s a complete thought.” That broadens our market because Workday sells deals to consulting firms and all sorts of consulting companies. I was able to draft behind a much larger player that is doing a lot of the heavy lifting for us. 

Sramana Mitra: Are there other players like Workday that you partnered with?

James Cramer: There is. We partnered with Financial Force as well. I wanted to be in two ecosystems to start with. I don’t have the manpower to have more than that. If you are going to form a partnership, you have to be committed. There are people and money involved. One ecosystem is Workday because they are essentially a services-centric company. They are focusing on non-supply chain-centric industries.

The other one that we wanted was with the Salesforce ecosystem. That turned out to be Financial Force and their PSA product. They easily have the most dominant PSA product in that ecosystem. We formed a really good relationship with them and some of our large customers come from that relationship. 

Sramana Mitra: Very good. How many people do you have?

James Cramer: About 65.

Sramana Mitra: What revenue level have you gotten to so far?

James Cramer: I don’t want that to be made public, but we are in the $10 million range. 

Sramana Mitra: What should we report it as? Our threshold is $5 million-plus but you don’t want us to report you as a $10 million company.

James Cramer: You can. It does not matter. We try not to get into the specifics on that. 

Sramana Mitra: We can report it as over $10 million in revenue. Is there outside financing?

James Cramer: We bootstrapped it for the first few years and then we did a small angel round for $1 million in 2019. 

Sramana Mitra: Why?

James Cramer: There were a few things. The services business was capable of funding the business, but as I added customers I needed to make investments deeper into the future. When we started getting going it was when a customer deployed. It was a more project-centric view of the world. That is fine for the first few customers. In fact, I encourage all entrepreneurs to take that approach initially.

As you get more customers with large enterprises customers, the needs top-up and require you to make investments deeper into the future. That went further out than the cash flow that our services could provide. So, we decided to get $1 million in capital to accelerate and plug some gaps in the company. $1 million is not a huge amount of money, particularly in enterprise software. What we did not plan to do, but were presented as an opportunity was that in 2019, Workday ventures came along and made an investment in the company as well. 

Sramana Mitra: In the $1 million angel round, did you and your partner participate?

James Cramer: We did not. 

Sramana Mitra: How much did Workday Ventures put in?

James Cramer: $2 million. 

Sramana Mitra: The total capitalization of the company is $3 million. 

James Cramer: That is right. 

Sramana Mitra: Terrific. It’s a very capital-efficient strategic way of building the business. 

James Cramer: As you mentioned, a lot of companies will bootstrap when they are in a pure services business. The challenge with enterprise software is that it becomes capital intensive from the front end. We use services to balance that and we try not to give our software away. We work to sell value and work with the customers. 

Sramana Mitra: We are big fans of building enterprise software companies using services as a bootstrapping methodology. The story that you shared is a textbook example of the methodology that we promote. 

James Cramer: You are one of the very few people that I ever heard that from. If I were to give any advice to an early-stage founder, I would tell them that the services business is their lifeline. It’s not just the capital, but you are as close to that customer as you can possibly be. The lessons that you learn from deploying your software are valuable. 

Sramana Mitra: If you follow my work, you will see that I am very contrarian to a lot of elements on how to build a venture. That is all based on case study work. I am not pulling this out of a hat. I have talked to thousands of entrepreneurs and the methodology that we have built is a proven methodology.

It is a proven case study and is validated by entrepreneurs who are using this methodology. We have Bootstrapping with Services, Bootstrapping with a Paycheck, Bootstrapping by Piggybacking on a PaaS platform. All these nuances of bootstrapping are tried and tested. 

James Cramer: I, 100%, agree. The only other person that I ran into was Mark Peek who was the former CFO of Workday. He now runs Workday ventures. When I told him my frustrations about raising capital and the feedback that I had gotten from the venture community, he told me, “James, just ignore all that. I took Workday public and we did 85% of all our implementation ourselves. Just put your head down and run the business. Don’t worry about it.”

Sramana Mitra: There is a bias in the venture industry that needs to be ignored. It was a pleasure speaking with you. Thank you for your time.

This segment is part 6 in the series : Bootstrapping Using Services to $10M: Zimit CEO James Cramer
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