Domain Knowledge Wins: Larry Goldenhersh, CEO of Enviance (Part 6)

Sramana: When did you sign Pacific Gas & Electric, and what was the momentum like for your next group of large customer?

Larry Goldenhersh: We signed Pacific Gas & Electric in 2001. We then set out to win at least 50% of the deals in the space for the next four years. We signed Southern Company in 2002 and American Electric Power shortly after that. We signed Chevron in 2002 as well. We focused on air compliance management, chemical, utility, and oil & gas. Today we have 35% of the generating capacity of the utility sector using our system to manage air, water, and waste.

Sramana: What was the competitive landscape like? Who was your competition?

Larry Goldenhersh: The competition was SAP who had folded a compliance module ‘for free.’ It was not very elegant, but they were powerful in IT. Excel spreadsheets and thousands of consultants were the real competition. In 2000, many of the compliance systems were client-server systems or manual processes that were bid for and won by consultants who ran them with spreadsheets. That is why we were able to tie our value to a ROI which is a good lesson for any entrepreneur. If you can tie your value to an ROI, then you will go a long way. It is critical.

Sramana: What was the revenue ramp of the company?

Larry Goldenhersh: We did not have material revenue until 2002. From 2003 to 2008, we doubled our revenue year on year. I was able to finance growth as long as I wanted with a first round angel investors. We have raised $32 million in total, of which $2.3 million was raised from 2000 to 2003 from the same angels. I gave our angels quarterly briefs on how we were doing. When I saw the need for more cash, I got it from them based on delivery of previous promises and credible projections about the future. Those angels are still invested today.

In 2003, several of the financial advisors to the people who had invested in our company told us that we needed to get smart money. They meant venture funding. We began a process where we advertised for the first time that we would consider taking money. We interviewed several firms and selected a firm in San Diego named Enterprise Venture Partners Capital. I selected them because they were local and because I believed they would take the time to meet with me and help me where we needed it. If your VC is unwilling to sit down with you for breakfast, then you probably have the wrong VC. Enterprise is the only professional investor we have had.

Sramana: Where is your company in terms of revenue today?

Larry Goldenhersh: We are about a $20 million company.

Sramana: How has the market changed today? Businesses are very savy about Internet use today. Is growth accelerating?

Larry Goldenhersh: Growth has increased. In 2000, there was great risk for businesses to go to the Web. With Web services and the commercialization of the Internet, there is now great risk for businesses if they do not move to the Internet. That has made business easier to capture. Of course, when you have 30% of the utility sector and 30% of the coal sector using your product, then you have a lot of high-reference accounts.

This segment is part 6 in the series : Domain Knowledge Wins: Larry Goldenhersh, CEO of Enviance
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