Navigating the Microsoft Ecosystem to Build a 12 Million Dollar Company: Brian Knight, CEO of Pragmatic Works (Part 6)

Sramana: What were you teaching in your courses?

Brian Knight: We had a course that we taught virtually which carried a $795 tuition bill. It taught the new version of SQL Server. Normally, someone would have to spend several thousand dollars to attend a course. Our course still had labs and everything else you would expect, but it was much less expensive. We were able to get about $40,000 in paid training from that first course. That shocked us. Paid training accounts for about 20% to 30% of our business today, and we had revenues of over $1 million last year.

Sramana: How many of your paid training customers go on to purchase other products from you?

Brian Knight: Quite a few. Our inside sales reps call class attendees. We try to convert that into more training opportunities. People who take certain classes will have a 6% chance of wanting our software. We sprinkle a little bit of our software into the training, which gets them curious. We have a funnel for our leads now.

Sramana: What percentage of your business is software versus consulting engagements?

Brian Knight: We decided to break the company into two companies. One is for software, and the other is services, which includes training. We did that for valuations. We knew a software company would have a 3x valuation and a consulting company would have a 1.5x valuation. About 40% of our overall company is software. Training and services account for 60%. This year is a very good year for software.

Sramana: When you look at software sales, how do those sales break out between SMBs and larger companies?

Brian Knight: On the revenue side, it is 70% large companies. On the number of customers, it is probably 40% large companies. It depends on the type of metric you are looking at. This year Microsoft is no longer supporting their old release of SQL Server, so large companies are being forced to upgrade. Our revenue for those projects has quadrupled this year. Those engagements are also much larger.

Sramana: When you combine the product categories, how big is your business?

Brian Knight: We have doubled every year. This year we are tracking towards a $12 million business. We did about $7 million last year.

Sramana: You also do non-profit work as well. What is the story there?

Brian Knight: We have a 501(c)3 that we get no revenue from, but we do get a lot of goodwill because of it. We have done this for three years. Our goal is to train veterans who are coming back from the war, unemployed workers, and underemployed workers, people who make less than $40,000 as a family.

So much of our lives is based on what family or city we are born into. We wanted to find a way that our company can tithe back to the community. One week a month we have a training class where we teach those three categories of people how to get into our IT market, specifically the database and .Net market. There is a glut of jobs and no people to fill them. We teach them the technology for four days, and on the last day, we do resume screening and speed dating mock interviews. We put people through 30 minute interviews to teach them how the interview really goes, so when they get a real interview, they are comfortable. We have found that 75% of our graduates are employed a year later. We have people who were carrying guns in Afghanistan or lifting boxes for UPS who are making $90,000 three years later. These people are passionate about changing their stars.

This segment is part 6 in the series : Navigating the Microsoft Ecosystem to Build a 12 Million Dollar Company: Brian Knight, CEO of Pragmatic Works
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