From Hard Core Techie to Successful Entrepreneur: Francis Dinha, CEO of OpenVPN (Part 3)

Sramana Mitra: What was the current problem that you could solve in 2005?

Francis Dinha: One of my friends started a company in Dallas. They were trying to solve the problem of circumventing the firewall. They raised about $35 million. He said, “How are we going to solve this problem?” I got this technology that’s like tunneling. I said, “I can structure a deal with you, but I don’t want to come and work as a consultant. We’re going to build this, but we’re going to provide a service as part of a subscription.” That was my first customer.

Sramana Mitra: What was the scale of the subscription?

Francis Dinha: It started from $30,000. Eventually, it went to $100,000 a month. Then that went to another company with the same model. I thought that what we needed to do was focus on small to medium-sized businesses. Let’s build software that’s very easy to provision and I wanted a subscription model. Even if the subscription is a smaller amount of money, it’s much more sustainable if you acquire a lot of customers. We launched in 2009.

Sramana Mitra: Until 2009, you were working with this one company?

Francis Dinha: This was the only major company we were working on while developing the technology. Unfortunately, they went bankrupt. They lost everything.

Sramana Mitra: And you lost your anchor customer.

Francis Dinha: Yes, but we got to a point where I could pour some of my own money. I brought a few angel investors only. I raised up to a million dollars. That allowed us to have that buffer. We already have the technology. Once we launched, the product started getting momentum. We’ve got more than 20,000 business customers now.

Sramana Mitra: In 2009 when you launched, how did you acquire customers? What was the segmentation?

Francis Dinha: The way we found the customer was very much organic. It was hands-off. It was all inbound marketing – SEO. We had this open-source.

Sramana Mitra: The lead generation engine was the open-source product?

Francis Dinha: Exactly. We leveraged it. For only a little money, you get the additional features on top of the open-source.

Sramana Mitra: What was the business model when you went from free to commercial?

Francis Dinha: We charged a very low fee – about $5 a year per connection. It was a freemium model. Even the commercial was free with two connections. You can access all the features. If you need more connections, you needed to subscribe. Then we started analyzing the pricing and adding more features.

Now the pricing is different. We went from $5 to $6, to $20. Now we get about $75 per 10 connections per month. This is the evolution of the pricing. Just a year ago, we launched a cloud product as well. This is more self-hosted. I wanted to build it as a service as well. That’s taking off even faster than the self-hosted service.

Sramana Mitra: When did you launch the cloud service?

Francis Dinha: That was a year ago.

This segment is part 3 in the series : From Hard Core Techie to Successful Entrepreneur: Francis Dinha, CEO of OpenVPN
1 2 3 4