Bootstrapping All The Way: Infinitely Virtual CEO Adam Stern (Part 3)

Adam Stern: Because we are engineers, we are largely responsible for helping Tutor Perini build their infrastructure team. We worked with them to build their skill levels and ensure that the instructor was choosing the right people for his team, and even to help them with inter-political battles. During that process, we earned a lot of professional services fees. Those fees were poured directly into our first virtualization.

Sramana Mitra: It sounds like you were basically customer-financed all through?

Adam Stern: Yes.

Sramana Mitra: Great.

Adam Stern: We immediately made the transition from doing professional services. That was a big risk for us. We were taking funds that we could have been using for advertising or building on top of our professional services. Instead, we poured it into the virtualization and hosting environment. We stopped taking professional services customers at that time.

Within a year, we saw a transition where we had more income coming from hosting than from professional services. A year after that, we let our customers know that we were transitioning. We helped them obtain contractors to fill the void. We exited professional services as soon as it became clear how big a deal virtualization was going to be.

Sramana Mitra: Let’s go through that in a step-by-step process. What year did you start the company?

Adam Stern: July 2003.

Sramana Mitra: How long did the professional services mode go on?

Adam Stern: Until 2009.

Sramana Mitra: 2009 was when you decided that you had enough of an understanding of the market that you could switch off professional services and build a product company.

Adam Stern: Yes. As we were building the hosting environment, it became clear that that was really the future we wanted. We just stopped trying to obtain new professional services customers. Over a period of time, just due to the natural way of things, we were finishing projects and moving on. At that very same moment, Tutor Perini had built this very large IT infrastructure and a very large competent team of engineers to handle it. We were no longer needed on a regular basis to help them. We earned our way out of a job there by teaching their team to manage their new infrastructure. It was time for us to move on. That Tutor Perini project was 80% of our revenue.

When that contract ended, we had to make a decision about whether or not to obtain another customer like this, or work entirely in the virtualized infrastructure space. I had decided that it was more effective to take my engineering talent and focus on building the best virtualization environment in the industry. We built Eve in 2007.

This segment is part 3 in the series : Bootstrapping All The Way: Infinitely Virtual CEO Adam Stern
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