Pioneering Data On-Demand: Salary.com CEO and Serial Entrepreneur Kent Plunkett (Part 3)

SM: It was easy to raise money in 1999. It was not easy to raise money in 2001. What was your experience raising angel money during that time window?

KP: I have never had a problem raising angel money. It was extremely easy in 1999. We did talk to some venture capitalists, but they did not understand subscription software back then. Because of that we were viewed as a consumer Internet offering, and we missed venture capitalist funding for consumer Internet ideas by one month. A year later we came out with our first corporate product, CompAnalysts, a job analyzer. It was a premium service, a higher-priced database of pay for corporations. Venture capitalists did not appreciate the recurring nature of subscription software models back in 2001.

SM: No they didn’t.

KP: It really took SalesForce.com to popularize the business model.

SM: Let’s talk about product strategy at that early stage. You launched the consumer brand first?

KP: Yes, in June of 2000. We immediately began to syndicate to AOL and Yahoo. We had both a destination website and syndicated partners for whom we powered the compensation portions of their websites.

SM: Where did you get the data? With a subscription model you need the data first.

KP: We raised under $500,000 in angel money and we were able to hire some compensation analysts who knew how to price jobs. We purchased sources of data that are sold to the general public called surveys. Some are sold to anyone who comes with a check for $3,000 or $7,000 and others are not; these are called non-participant surveys. We bought publicly available surveys and were able to calculate the pay for a list of jobs that we came up with that we thought represented a cross section of the economy. We launched with data on a little over 500 jobs.

SM: It was all content you developed in-house by extrapolating from surveys and other industry data?

KP: Exactly.

SM: At the same time you had syndication deals with the Internet portals. How much longer did it take for the release of the corporate product?

KP: It launched a year later. We had to build a much larger database of pay. For corporate use, typically you want to see pay data that covers large and small companies. Pay data also differs by industry. An accountant working in the financial services industry is more important to value creation than in the refining business. As companies get bigger, people tend to make more money for the same job. There are also geographic adjustments. We had to develop analysis tables and a lot of complex algorithms before we could launch a corporate product. The process took us the full year.

When we launched the product in 2001, despite the economy being in slowdown mode, we were able to sell the product almost immediately because it was revolutionary for the space. We were basically competing against consulting firms with a product that could give you a good answer in less than 30 seconds to a question that could take a consulting firm a couple of weeks to answer. If a company used the surveys themselves and ran analysis, it would take them 30-45 minutes.

SM: What did you price that at?

KP: Its list price was $10,000 to $15,000 for companies that range from 3,000 to 50,000 employees.

This segment is part 3 in the series : Pioneering Data On-Demand: Salary.com CEO and Serial Entrepreneur Kent Plunkett
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