Three Co-founders Bootstrapped with a Paycheck, Now at Over $50M Revenue: Ganesh Shankar, CEO and Co-Founder of Responsive (Part 4)

Sramana Mitra: Okay, got it. You just took me through a bit of the pricing and ROI analysis. What did you price your product at?

Ganesh Shankar: One of the biggest moves of RFP.io back in the day, which separated us from the rest of the crowd, was our belief in helping our customers win business. Many licensing models charge based on the number of users in the system, with each user paying a fee. We did not use that model at Responsive. We felt giving unlimited users was important because we wanted our customers to win RFPs.

In the early stages, and even now, we positioned ourselves to support companies hiring product managers or security managers to respond to RFPs. These roles don’t directly generate revenue but address growing pains. We didn’t want to be part of that pain. So, we told our customers, “If you are buying from Responsive, bring in anyone you need to help win a deal.” Right subject matter expertise is more important than asking for extra dollars to license them.

Then, how did we monetize? We monetized based on the number of proposals managed in our platform.

Sramana Mitra: How many proposals were being managed on your platform?

Ganesh Shankar: The more you do in a platform, tells me you are bringing in more revenue opportunity for the company. Rather than being part of a growing pain, I want to be part of a revenue generation process. We structured our licensing in a way that is based on volume of proposals that you manage.

Sramana Mitra: So, you’re based on the volume of proposals, not the dollar amount of proposals. You’re not really getting a cut, but you are a volume-based pricing model.

Ganesh Shankar: Correct. We’re not getting a cut of the dollar side, but when you do more, that tells me you are doing more RFPs than ever before. So I want to be part of that process.

Sramana Mitra: And how much did you charge? What’s the tiered pricing model? Where does it start and how does it go up?

Ganesh Shankar: In the initial days, it was closer to $6,000 a year. Basically, $500 per month to begin with. We gave five proposals to manage at any given time for unlimited users.

Sramana Mitra: Then how does that climb? What kind of average deal sizes were you doing?

Ganesh Shankar: Back then, our average deal size in 2016 when I started the business, it was less than $4,800 because of the discounts that we gave. Today, our average size is probably fifteen times of that in less than eight years.

Sramana Mitra: So what are the major milestones along the way? I think we understand the business and the value proposition. I think we understand very well your initial market penetration strategy. I think you did a very, very nice job of picking a segment with very specific pain points. It’s like Excel to Excel – Excel in, work on it, and then Excel out. It’s a very nice positioning. I think it’s a wonderful positioning and it’s a large portion of the market. So it’s good TAM or available market.

As you went into the market, what were some of the big inflection points?

Ganesh Shankar: Yes, the first one I would say is to decide, which side to pick. Today we have both sides of the segment.

Sramana Mitra: You already explained that.

Ganesh Shankar: That’s the number one decision. Number two decision was regarding fundraising. How do we raise funds? We always believed in creating a sustainable business. We did raise a couple of million dollars from VCs and angel investors in 2017.

Sramana Mitra: By the time you raised that first round of institutional funding, you were already in revenue, right?

Ganesh Shankar: Yes.

Sramana Mitra: What level of revenue were you at?

Ganesh Shankar: I would say probably about a million dollars.

Sramana Mitra: Great!

This segment is part 4 in the series : Three Co-founders Bootstrapped with a Paycheck, Now at Over $50M Revenue: Ganesh Shankar, CEO and Co-Founder of Responsive
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