From Developer to Serial Entrepreneur: Michael Morris, CEO of Torc (Part 2)

Sramana Mitra: What year does this bring us up to?

Michael Morris: This would be the end of 2001. A group of us stayed on for a little bit, then we left. We went and started a company called Topcoder. The whole idea was to build a community for software developers to compete and earn a profile, and do what you used to do in universities where you had grades. Oftentimes, you had competitions. We started doing those things with Topcoder. We got to about 10,000 people. We just saw it spread and grow. We grew that community. Fast forward to 2008, we probably had about 250,000 software developers in the community.

Our business model was to go out and find companies that needed to get work done. We would put that work out as projects on the Topcoder platform, and people would work on them. Sometimes they would compete on solving complicated problems. It would be a race to see who can do it first. Sometimes it was just a contracting opportunity. I did that for a long time. I joined Topcoder in 2002. I stayed till about 2011. I was part of the founding team. It was just a fantastic experience.

Sramana Mitra: How many of you were on the founding team?

Michael Morris: There were ten of us.

Sramana Mitra: How were you making money? Were the companies paying to give you these projects to run on Topcoder?

Michael Morris: Have you seen the movie The Social Network?

Sramana Mitra: Sure.

Michael Morris: That time when they were coding and trying to race to see who can solve the problem the fastest. That was how they recruited their developers for the original version of Facebook. That was Topcoder. We were the engine where people could come in and you can set up a competition and get a group of people to compete. It was an arena. Our first set of customers paid us just to sponsor our competitions. It was Sun Microsystems, Oracle, and Microsoft. Then Google.

Sramana Mitra: What scale are we talking? How much were they paying to run a competition like this?

Michael Morris: Probably $100,000 to $250,000. We package it up as an annual subscription. They would be a sponsor of the Topcoder Open, which is our version of the Olympics. It ran for a year. You would qualify through a series of competitions. At the end of the year, we had a big in-person event. They would sign up as a sponsor for that. The top end was $400,000 for the title sponsor and $100,000 for the other companies. That part wasn’t hugely scalable. There weren’t a thousand companies like that that were interested in sponsoring our events.

Sramana Mitra: You were 10 people who had to sustain yourselves in this business model. There was enough revenue coming in that you could sustain the 10 of you well.

Michael Morris: Yes. The main Chairman funded the majority of the original build. Then we got to a point where we were generating enough money so that we can sustain the business.

Sramana Mitra: How long did it take you to get there?

Michael Morris: Three years.

Sramana Mitra: The Chairman funded that three-year build-up period.

Michael Morris: Yes.

Sramana Mitra: Do you remember how much money was spent to get to that breakeven point?

Michael Morris: To that period of time, it was probably close to $10 million.

Sramana Mitra: This single person funded $10 million?

Michael Morris: Pretty much.

Sramana Mitra: Who was this?

Michael Morris: His name is Jack Hughes. He was the Chairman of the previous company that we had sold. He earned his money from the sale of that. We had a decent runway.

Sramana Mitra: What level of revenue did the company sponsored-competition reach?

Michael Morris: In 2011, about $20 million.

Sramana Mitra: All from running competitions?

Michael Morris: Yes and project-based work via competitions. Sponsorship was a small piece. The majority was building IP through competitions.

This segment is part 2 in the series : From Developer to Serial Entrepreneur: Michael Morris, CEO of Torc
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