Bootstrapping to $5 Million: IdeaScale CEO Robert Hoehn (Part 7)

Robert Hoehn: Just to circle back to the competitive advantage, another one is data. Early on, we took the stance that we don’t want to charge volume-based pricing, which is against the grain for enterprise software. Most people are looking at it and saying, “Enterprise CIOs expect to pay per seat.” We’re afraid that customers will limit their audience and not try to build a crowd within the company because they might be saying, “I’m just going to do a small pile at first and pay for that. If that does well, I’ll roll it out to a larger audience.”

We really want to take out every hesitation for that, even for pricing. We want them to build the crowd as fast as possible, get as many people talking and interacting with each other, and get those numbers up as high as possible. We decided to go with a fixed model with unlimited community members. That’s one way that we’re different. The other cool thing is, we managed to build a huge dataset — a dataset of people, their behaviors and how they interact, voting on an idea, while moving an idea through various stages.

We’re taking a dataware approach. Someone could go and build a lot of the tools that we’ve built, although I’d challenge them to do it as well as we did. Let’s say that they did. We have a huge advantage in that we have a pretty huge dataset. We have over four million members across all our communities. It’s a pretty big dataset there and hundreds of thousands of ideas in all those communities.

There are lots of interesting possibilities for helping to predict which idea is the best. This is a very common problem with innovation management in any program whether using software or not. I have all this avalanche of ideas coming in. How do I parse them out? How do I break them out by horizon? That’s the challenge that we try to solve and we really want to focus on using some type of AI or machine learning to help the customer pull that needle out of the haystack.

Sramana Mitra: Where are you now? Where did you finish 2015 at?

Robert Hoehn: We finished at $5 million.

Sramana Mitra: What do you want to do? Do you want to continue growing organically? You talked about trying to consolidate the market. Is there any interest in doing a roll-up of sorts or do you want to stay pure and just do it organically?

Robert Hoehn: A roll-up is really attractive to me at many levels. I’ve found that there are many small players that actually want to join us. I’m constantly thinking, “How do I pour gas on this?” I truly believe that I won’t be able to do that unless I can build an audience and have a vertically-integrated set of products and services. A lot of people are giving me advice to stay away from services, but what I’ve learned is that what drives SaaS multipliers is your retention.

I’ve found that retention is really hard. You need at least a light set of services. For example, somebody who is starting a new innovation program in a large corporation, they do need some services and consulting. What we realized is that we’re increasing that offering and trying to make it scalable in the best we can. It’s doing a tremendous job at improving our retention, which is a huge driver in our valuation.

Sramana Mitra: It was very nice talking to you. You’re doing an interesting company.

This segment is part 7 in the series : Bootstrapping to $5 Million: IdeaScale CEO Robert Hoehn
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