Navigating Through Multiple Pivots: Convercent CEO Patrick Quinlan (Part 7)

Sramana Mitra: What else have you done that is an interesting strategic move, whether it’s accelerators or inflection points in your business?

Patrick Quinlan: You always learn from your failures more than your successes. The beginning of 2013 was really solid. We were able to raise capital from Sapphire. We had a go-to market plan. We had a product plan. Our product plan is utterly consistent with the first diagram we drew. It’s deeper and we know more. We understand it better, but I could still use that PowerPoint to sell that product.

Sramana Mitra: It’s the same strategy and you just executed on the same strategy.

Patrick Quinlan: There’s the go-to market and there’s the product. The product is spot on. On the go-to market side, we learned an extraordinarily painful lesson. At that point, we had raised nearly $16 million on a go-to market strategy that was SMB. We were going to do the Marketo thing.

Sramana Mitra: You’d raised $16 million on an SMB-facing strategy for that product. That doesn’t make sense to me.

Patrick Quinlan: The theory that we were under is that all these big companies were having all this regulatory pressure put on them. Our theory was all the people selling to Ford or Walmart were going to need functioning ethics and regulatory requirements. We built the product that we always envisioned but we built it for an SMB customer.

We put together 17 inside sales guys. Instead of going out and testing, could we really sign up? How do we know we can sign up 10,000 of these in the upcoming years? We built the entire machine and we spent a ridiculous amount of money building that machine in 2013. We got a bunch of low-hanging fruits in the first six months. What we quickly realized was this market isn’t as ready for this as we thought.

Sramana Mitra: I would have guessed right from the beginning. You were finding traction in the large enterprise where there is a lot of regulatory pressure.

Patrick Quinlan: We did not sell to our first enterprise customer until May of 2014. We did the layoffs in the beginning of 2014. It was 74 to 40. We just buckled down and took the message to the enterprise. It was extraordinary. Our first enterprise company was Philip Morris. They deployed our product in 190 countries in 34 languages and told us it had to be up and running in four months.

We had to take an SMB product that didn’t have pagination for employee names and we had to meet data privacy requirements. We had to make sure that the languages worked. Fortunately, we built the product with enough flexibility that we were able to make that shift. In the coming days, we signed on Under Armour and other enterprise customers. Then there was this other plateau that we hit.

We really focused the company on that falling over. 2015 was a flat year. We did very little revenue. The initial customers saw the vision, but everybody knew there’s a difference between seeing it and knowing it’s ready. It took us 18 months.

Sramana Mitra: You had to make it a scalable enterprise-level product. What were the denominations of a large enterprise deal? What are we talking?

Patrick Quinlan: We have four modules that we sell. It’s all on product. Philip Morris bought one module for just over six figures in ARR. Some of those initial customers didn’t pay much at all. Today we are in the mid six figures for a single module. We did make another small error where we tried to sell everybody everything and the deals got too complex. Convercent is your ethics and compliance platform that will bring your program to another place and deliver analytics that will show you ROI.

Because of the data that we hold, the info security that we have to go through is extraordinary. In early 2016, we figured out the contracting and MSA. Our focus is to get to that $50 million in ARR by signing up customers for what they need right now. It’s going to be an awesome opportunity for Convercent. As we keep building out, our roadmap is going to allow us to get that $200,000 customer to $600,000 and beyond.

Sramana Mitra: Currently, how many $200,000 customers have you been able to ramp up?

Patrick Quinlan: We have several.

Sramana Mitra: You have somewhere between 10 to 20 of over $200,000 enterprise customers?

Patrick Quinlan: Right.

Sramana Mitra: It’s almost like a pivot. You have a set of SMB customers, but the business the you’re building today is the large enterprise customers. There was significant reset for that.

Patrick Quinlan: I would agree with that somewhat. On the go-to market side, you’re correct. When we were buckling down, we got out of the PR business. If you got back to the way we talked about the product in Q1 of 2013, it’s exactly the same. It’s helping companies elevate themselves.

Sramana Mitra: The vision and the value proposition is the same but if you double-click down from there, there’s lots of implementation and strategy changes.

Patrick Quinlan: Yes.

Sramana Mitra: Nonetheless, you have identified something interesting. You’ve raised about $50 million in funding?

Patrick Quinlan: Yes.

Sramana Mitra: Do you want to provide any guidance on where you are right now on revenue?

Patrick Quinlan: We’ve grown now, two years in a row, above 75% in ARR. We are over $10 million.

Sramana Mitra: Great. Thank you for your time.

This segment is part 7 in the series : Navigating Through Multiple Pivots: Convercent CEO Patrick Quinlan
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