Building The Small Business CRM Solution: CircleDog CEO Charlie Crystle (Part 5)

SM: I have done three startups myself, the first of which I started while I was at MIT. I came out here as soon as possible to be a part of this ecosystem.

CC: It is an amazing ecosystem. Every time I am out here I am reminded how isolated we are.

SM: The network effect here is very powerful.

CC: It is the personal contact. It is not the online contact. This actually proves that personal contact makes a significant difference.

SM: What happened when you came back from Latin America?

CC: I did about 35 trips over four years. I am not the most focused guy in the world. I was working on that, did another record and helped Witness in New York, which was started by Peter Gabriel. They were very early in the movement to give cameras to local activists to document human rights abuses.

I ended up consulting pro bono to non-profit organizations because while I was really interested in trying to have an impact on street kids, I was not qualified. I could help them with their computers, so that is what I did. People had terrible systems there. I ended up doing a lot of research and found that most non-profits were using Excel or Access to track their donors. They were not methodical about their fundraising, so there was a lot of failure because of that. The software available to them was poorly designed and was not easy to use. They had to get training, which was expensive. The average cost was $3,000 per seat for something, which was bad.

Blackbaud [suppliers of accounting and fundraising software] is the leading company in terms of revenue, and their average selling price is $40,000. [Their product] is not designed for the small non-profit with $50,000 in revenue. They will, however, sell to anybody. They tell the non-profits that if they have their software they will make more money.

We wanted to build something that helped non-profits focus more of their resources on their core missions and less on technology. Technology should be transparent, affordable and should not require training. I developed the prototype as a web-based application, but I got my first employees from ChiliSoft. When the research came back, we found out that non-profits did not trust their data out on the web. It was right around the time that PipeVine failed. I think that was an $18 million loss of donor money.

SM: How did they try to help non-profits?

CC: They were a donation processing clearing house. I believe they had trouble with the crash.

SM: So you decided that was not a market you wanted to go after?

CC: Our research showed us that 85% of the non-profits did not want hosted software, they wanted desktop software. We developed a platform that merged the power of the desktop with web services. That was back in 2002.

SM: How did you finance this startup?

CC: I sold the beach house, the one good investment I had made, and funded the company with that money. From there we have grown organically. We raised some money from friends and family. Our first product did not hit well. Our first year we had about 250 customers at $299 each, so nothing sustainable. We got the second product right. We went from 250 to 3,000 customers.

SM: What was the second product?

CC: It is called GiftWorks. It is donor management and mailing list management. It is a CRM for non-profits. There is a market of 1.5 million non-profits, and the addressable market there might be $1 million. Most are really small and are not operational. This year was increased the price to $399. We also came out with a higher end product, which is $699.

SM: Are those one-time or recurring fees?

CC: They are one-time fees. Traditional licenses.

This segment is part 5 in the series : Building The Small Business CRM Solution: CircleDog CEO Charlie Crystle
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