Bootstrapping Lessons: FairWarning CEO Kurt Long (Part 4)

Sramana Mitra: How long did Open Network go on?

Kurt Long: Almost 10 years.

Sramana Mitra: What happened then?

Kurt Long: It was acquired by BMC.

Sramana Mitra: What year was that acquisition?

Kurt Long: I think it was 2004 or 2005.

Sramana Mitra: You did not raise outside capital?

Kurt Long: I did.

Sramana Mitra: Tell me around what point and under what circumstances you raised money.

Kurt Long: I raised money at the point where we had probably sold 5 to 10 major customer accounts. We raised money with a customer called Blue Cross Blue Shield. At another inflection point probably at 30 customers and several million dollars in revenue, we raised money with institutional investors like JP Morgan and GE.

Sramana Mitra: Do you care to disclose anything else about your Open Network story?

Kurt Long: You wind up, by virtue of having institutional investors, with some great mentors. You wind up with some people around you that can help accelerate your knowledge dramatically, but you also wind up, if you’re not very careful, changing the culture of what might have been a customer-driven business into a financial business always with an exit in mind. That would be the first couple of observations.

In the model that I just described which is services morphing into product, you wind up with what I call an engineering-led strategy. You engineer product to fit a customer environment. You try to sell it multiple times and then you try to market it. What I would learn later is that it’s incredibly important to completely reverse that thought process to get a business to scale. You don’t start with engineering. You start with the market problem. I’ll never do another company starting with an engineering perspective. It goes on to how do you market it to fit the need? How do you sell it and get it through channels and then what engineering characteristics does it have to have to meet those.

Sramana Mitra: Having said that, based on your background, a lot of entrepreneurs that we work with start from a technical background. They start from their technical experiences and very often end up in this solution looking for a problem mindset and try to graft a market on top of somethign that they’ve already thought about from a technology point of view. It’s a very common mental model when it comes to entrepreneurs who come from technology background.

Kurt Long: Yes, that makes complete sense.

Sramana Mitra: What happens next? What’s the next move?

Kurt Long: After I left Open Network, I was looking around. I was still young. I was 42. What do I do next? What you find out really quickly is it’s not very interesting to not matter. It’s a fun thingto matter to your team members, your Board of Directors, and customers. When you’re on the sidelines, within a short period of time, you don’t matter to anyone except to your family and mostly, to your pets. I didn’t enjoy not mattering.

Sramana Mitra: I hate that.

Kurt Long: Yes, it’s no fun. I evaluated a whole series of things. Anything from real estate to franchise. I quickly concluded that the software business was a really cool business to be in because it’s a unique opportunity to build something once and be able to sell it an infinite amount of time. Even though it’s competitive, all the problems are far overwhelmed by the excitement and opportunity of being able to build something once and being able to create value for as many customers who choose to buy it. I wanted to be back in the software business.

This segment is part 4 in the series : Bootstrapping Lessons: FairWarning CEO Kurt Long
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