Building a Marketing Software Company from Utah: Convirza CEO Jason Wells (Part 5)

Sramana Mitra: What were the levers for scaling this? What strategy did you take to scale this business?

Jason Wells: Strategy number one was to change the business from a professional services business into a software business. There was some back-end technology and some software that was built to help them do these things, but the clients didn’t pay for any of that. They just paid a certain amount an hour for the services. The first piece was to create a software and a SaaS model. What’s interesting is you would take the client that would be paying more for the professional services and you would teach them to handle those human services on their own. They would have all the software to track their advertising and attribution and do the analytics on it. We built this prototype and essentially, used these existing customers as a test for this. First of all, we split the professional services and said, “You’ll pay for the professional services, but you’ll also pay for a software license.” We split that out. What we found out is that when customers were done with their training, they would keep paying for the software, but this is just more of a prototype that we were going through. We did this in the first couple of months in 2008. Then in October, the second big crash in my life happened with the whole collapse of the market. I’d just started doing the pitches for raising capital in October. I got a call from Jeremiah and he said, “Our largest client is going to be cancelling.”

Sramana Mitra: What was the scale of the business at that point?

Jason Wells: About a million dollars in revenue.

Sramana Mitra: So they were about half a million dollar contract.

Jason Wells: Yes. It wasn’t an annual contract. It was month to month and it depended on the amount of training. These professional services can be cut so quickly because they’re not integrated into the business along with all the software integrations. It took some time for them to come off over a period of time. We lost probably half of the customers that we had at that time. We, pretty much, had to let go of our sales team, which was relatively small. It pretty much got down to me, Jeremiah, an account manager, and an accountant. It was just this skeletal crew. Honestly, it was purely about survival.

At that point, I had to throw out whatever plans I had for scalability and for development and just sell whatever we could to keep going. In 2009, it was really Jeremiah and I going to trade shows and getting on the phone and calling people. We kept the business profitable. We had to. There was no money to be raised. We did whatever it took. We just survived in 2009. Then in 2010, we stayed steady and continued to work on the concept from a bootstrapped perspective at that time.

Then, we had an interesting opportunity. It started out with one client who was seeing what we were doing. He was at a board meeting and talking about this. On the Board was one of their major investors who had about a $200 million stake in the company. They said, “This is fascinating.” The Board Member reached out to Jeremiah and wanted to talk about what we’re doing. He learned a little bit about the business and then referred us to one of his other portfolio companies. A little later throughout the next year, he referred us to another. We began working with three of the other portfolio companies. These are public companies.

Even at the beginning, he said, “I really like your model but it’s not very scalable.” Throughout this period, it took us time to keep everything under control. In 2010, we went knocking on their door and said, “We think we’ve got a plan and a model. We’ve been running this in a prototype beta and we’d like to show you what we’re doing.” We went out to New York to show him the plan. I gave him the pitch. We raised $3 million to kick off the plan that we had started with a few years earlier.

Sramana Mitra: The $3 million was raised on some early validation of what you were going to do – analytics in SaaS mode for marketing organizations?

Jason Wells: Yes. In some respect, we had some track record of working with clients. We had survived tough times. We built some credibility there. They liked what we were doing but all of the investment hypothesis was based on building out what is Convirza today – automating all the aspects, having speech recognition, and using that to understand what was going on for attribution.

This segment is part 5 in the series : Building a Marketing Software Company from Utah: Convirza CEO Jason Wells
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