How To Get a 20 Million Dollar Pre-Money Valuation for Series A: Tableau Software CEO Christian Chabot (Part 6)

SM: How did you find your initial customers?

CC: We used things like cold calls, Silicon Valley networking, and friends of friends. When you’re starting from nothing, you do whatever it takes. I was talking to anyone who would listen. I networked heavily, got friends to send me ideas, and went to alumni databases. After we put up a website, some people started to find us. That would produce one to two leads a week, and at that stage every lead was a drop of gold. If you treat every lead like gold and have enough perseverance, customers will start bubbling up.

SM: Where were you finding users? Did you target business intelligence users across the board?

CC: We don’t have an industry focus but we do have a user type that we focus on.

SM: Was it a vertical market based on user function?

CC: It’s a profile of a person. We are applicable to knowledge workers who need to interact with data as part of their job once a month or more. We call those types of users data workers. That is who our market is. You can find data workers in every profession.

SM: Were you using direct sales?

CC: Yes, and we still use direct sales today. We use the inside-out model. It is the same model that Salesforce.com uses. We leverage a largely inside sales force and complement it with field reps. When I was in venture capital, virtually every VC was making the mistake of overloading company with field reps.

SM: I would say that over the past five years that model has matured greatly. The success of Salesforce.com and the software as a service model have opened their eyes.

CC: WebEx was probably one of the first. They are a software company but nobody thinks about them that way. That’s the beauty of the model. People tend to form a personal connection with their brand.

SM: There are a lot of things that came together to make that work. Without the Web it would not work. Without broadband it would not work.

CC: That is why I think WebEx is one of the first pioneers. They used their own tool to do the job. They are one of the Valley’s best successes. They have the same investors that we have. When I was selling a business model, that was one of the things that got our investors excited. At the time I was proposing, most enterprise software companies were not doing it.

SM: You took venture capital funding?

CC: We did later. We bootstrapped for the first two years. Then we started to earn our first customers and managed to secure a few really big deals.

SM: What kind of revenue did you get up to before taking money?

CC: We closed a couple hundred deals in direct sales. I also closed a mammoth deal which was an OEM deal. We did that with Hyperion, which is now a part of Oracle.

SM: Were OEM deals with intelligence vendors part of your strategy?

CC: Yes, but very carefully. I view OEM deals with the major platform providers as a means to an end. It was just what we needed during our startup years. I don’t believe that peer OEM deals in software ultimately create big viable companies. For us it was early market traction. It was a vehicle for recognition and some financial stability as well as respect from industry analysts. That is the only OEM deal we have ever done.

SM: How big was that deal?

CC: It was a four-year deal that involved a 10-digit figure. We had an advance on the deal as well.

SM: Why did you raise money?

CC: Because we have big dreams. We needed capital to ramp faster. Let’s define the destination as a major publicly traded billion-dollar market cap company. That destination can be arrived at by bootstrapping alone. However, we wanted to go faster. I needed more capital for that. More capital does not guarantee that we will arrive, but it can help us arrive faster.

SM: Who was your investor?

CC: New Enterprise Associates.

SM: How much money did you raise?

CC: We raised $5 million. We grew the company for four more years, and in August 2008 I decided to raise more funding. NEA took the whole round and we raised $10 million.

This segment is part 6 in the series : How To Get a 20 Million Dollar Pre-Money Valuation for Series A: Tableau Software CEO Christian Chabot
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