Positioning a Generative AI Startup: Erik Severinghaus, Founder and CEO of Bloomfilter (Part 7)

Sramana Mitra: Okay. So based on this, in terms of prioritization, are you going more after the enterprise accounts, the very large deals like the Infosys, TCS, and IBM global services, or are you going after the mid-market? Where are you finding traction?

Erik Severinghaus: Yes, it’s a little bit of both. Mid-market deals tend to have a little faster deal cycle. You’ve a few less hurdles to get through. So we’re starting to pick those up at more of a rapid clip. At the same time, we’ve just signed a couple of Fortune 500 customers. We have a few more that we’re talking to. So that’s continuing to grow for us. A lot of what we do is with partners and through partners. We’re using an ecosystem and a partner-first go-to-market model.

We work a lot with consulting companies. The first and most exciting for us is SoftServe, which is about a billion dollar software development shop based out of Ukraine. They built an offering on our platform called DevIQ. And so they use us to go do these sorts of assessments and do these sorts of transformation activities. And we support our partners through that kind of a go-to-market model.

Sramana Mitra: I see. And are there other companies like that?

Erik Severinghaus: Yes. There’re a couple more announcements coming very soon, and we’ve got a few more on the way.

Sramana Mitra: Very good. So, what is the TAM based on this pricing model? What is the TAM that you are trying to pick on?

Erik Severinghaus: Our analysis shows a $5 billion total addressable market (TAM).

If you start to look at the amount of software being developed and the amount of money being spent, we could break down the TAM in a whole bunch of different ways. Consider Salesforce, which has about $30B revenue right now for basically managing the process around what’s happening inside sales and go-to-market for most companies; that much or more is being spent in the world of software development. –

Sramana Mitra: That’s top-down?

Erik Severinghaus: That’s correct.

Sramana Mitra: Software development is a process which includes JIRA, GitHub, which is all these other tools and so forth. For you, from a bottom up standpoint perspective, it’s not as big. But if you’re calculating that to $5B, it’s big enough to build a SaaS.

Erik Severinghaus: I think it’s always hard for a company at our stage. We’re a seed stage company. I can draw a lot of big animal pictures on a whiteboard and I can show a huge TAM. What’s always, to me, the magic of it is the how do we get from where we are to where we need to go.

Sramana Mitra: I think for building any kind of venture scale company, you have to hit repeatability. You have to find how you sell these big deals to large enterprises. If you’re selling half a million, quarter million dollar deals, how do you sell those deals? How many of those deals are out there to be done? And then how many in the mid market and what’s, what is the deal size? And that’s how you do the bottom up TAM analysis. Absolutely.

[SPEAKER_: I couldn’t agree with you more.

Sramana Mitra: You have been doing this company for a couple of years, or this company has been kind of pursuing customers for a couple of years. Where was the initial traction? Was it in mid market? Was it in enterprise? Where did you start to find product-market fit?

Erik Severinghaus: We have pretty consistently been in both the mid-market and the enterprise, and we’ve seen both work.

Sramana Mitra: All right. What about financing? How much have you raised?

Erik Severinghaus: We raised a $7 million seed round a year ago.

Sramana Mitra: What about team? Is everybody in Chicago? Is this a distributed company? What kind of a team structure?

Erik Severinghaus: We’re split between Chicago and Cleveland, Ohio. The initial founding team was four software developers who ran a consulting shop that they closed down to start Bloomfilter. My co-founders, Brian and Loki and Chris and Andrew, are all in Cleveland. We’ve continued to invest in the Cleveland market as well as hiring in Chicago. So we’re kind of split between two cities.

Sramana Mitra: Ohio has a lot of universities, so there must be a population of good software engineers who want to live there.

Well, wonderful story. Congratulations and all the best. It’s so interesting to see how generative AI is being applied to different problems in different domains. And really the driver is domain knowledge, right? In your case, you had these four software engineers who understood the software development process and figured out how to leverage generative AI to solve this process problem. It’s everywhere right now. It’s domain knowledge combined with generative AI technology, and we’ve seen a lot of interesting innovations.

This segment is part 7 in the series : Positioning a Generative AI Startup: Erik Severinghaus, Founder and CEO of Bloomfilter
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