Bootstrapping Using Services, Scaling Using Content Marketing: John Sundberg, CEO of Kinetic Data (Part 6)

Sramana Mitra: What is the ramp of the company? You said you did $100,000 and then $250,000 in the second year.

John Sundberg: We were doubling every year for about six years. Then it went flat for about five years during the economic slowdown. Last year, we did $7.5 million and the year before $5 million.

Sramana Mitra: You have not taken any financing? This is all bootstrapped, right?

John Sundberg: I invested the original $100,000.

Sramana Mitra: How many people do you have?

John Sundberg: We acquired our first company this year in about January. That brings us to 40.

Sramana Mitra: What company did you acquire?

John Sundberg: A company called Coderow out of Minneapolis.

Sramana Mitra: The reason for that acquisition is?

John Sundberg: A few reasons, but the key reasons are they had experience in mobile and consumer software. Our company is working in the enterprise software space and what we’re trying to do is make it easier for companies to work with themselves. Big companies have big red tape problems. We build software to make it easier to get things done internally. The friendlier and less threatening that software can be, the more it gets used. By bringing in expertise in mobile and a whole new perspective of how consumer software works and the user experience is the other benefit.

Sramana Mitra: Before you acquired this company, what was your head count?

John Sundberg: 31.

Sramana Mitra: They’re a pretty small company.

John Sundberg: Yes.

Sramana Mitra: Was it an all-cash acquisition?

John Sundberg: Yes.

Sramana Mitra: You are at about $7.5 million last year. What do you want to do? What’s your game plan?

John Sundberg: I get that question asked, “What’s your exit plan?”

Sramana Mitra: Not necessarily. You don’t necessarily have to have an exit plan. My philosophy of entrepreneurship is entrepreneurship equals customers, revenue, and profits. Financing and exit are optional.

John Sundberg: I want to continue, so that’s the first thing. We will grow as appropriate. There isn’t anybody saying, “You need to double next year.”

Sramana Mitra: Grow at your own pace or not, if you choose not to.

John Sundberg: I would say that nobody really chooses not to grow. I think you choose how much pain you want to bring and how much risk you want to bring. I have four kids and I like to say my kids need mittens. Fundamentally, we’re profitable every year. We have great control over our expenses and how much effort we put in selling. What I’m doing is building a foundation of software that I believe is going to be world-changing for businesses. I laugh because that’s such a big thing. But the thing is, I actually know that we’re doing it. It takes a while to do. I could get external investors in and speed up the process but I don’t really think that speeds up the process. I just think that people are running faster. You just get there the same time anyways.

We’re building great stuff and we have happy customers. We’re building the kernel properly. My big thing for the next year is to make our software be consumable, manageable, useable, and have companies benefit from it that have 100 or more employees. Right now, we sell to companies that are 5,000 and more employees. The reason why is they have enough volume in their organization to justify the energy it takes to own a piece of software like ours. I want to make better software that a company with 100 people will benefit from.

Sramana Mitra: Being in business for quite a while, how do you position your product? One thing I got is you’re going to move beyond enterprise software. You’re going to go into the SME market. There’s a segmentation broadening that’s happening. Is it, functionality-wise, the same target audience?

John Sundberg: When a software is sold, it’s $200,000 to $500,000 of sales, generally speaking. With that, it’s takes one to six months to get the software up and running. Therefore, a company needs to understand that they’re adopting a one-month to six-month project for a couple of people internally to pull it off. We’re making functional changes and templates, you could say, where it’s reasonable for a company to say, “I want that software in that same week.” If that’s on a Monday, they’re benefitting from it on Friday. That’s a lot of content that’s created to pull that off.

This segment is part 6 in the series : Bootstrapping Using Services, Scaling Using Content Marketing: John Sundberg, CEO of Kinetic Data
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