Bootstrapping Using Services: James Kane, CEO of RWS (Part 6)

Sramana Mitra: In 2011, you had scaled significantly. Where are the revenues at this point?

James Kane: I want to say they’re right around $4.5 million or so. My recollection gets a little bit fuzzy there.

Sramana Mitra: What are the next strategic moves? What was the thinking behind those moves?

James Kane: We entered a period of time where growth slowed. We attributed it to the charging of the setup fees. In 2011 and 2012, we suffered a little bit in terms of growth. We didn’t lose ground. We just weren’t growing as explosively as we wanted to. Then in early 2013, we changed our model to one where we didn’t charge large upfront setup fees. That wound up reigniting sales growth again.

Sramana Mitra: Was that an observation that this setup fee was hindering adoption?

James Kane: Yes, that was our observation. We couldn’t just drop it easily. It changed our underlying economic model because without that setup fee, growth becomes cash flow negative. When you compound that with an anticipated higher sales volume, you take a big, combined hit.

Sramana Mitra: When you dropped this, it sounds like you were able to get to a whole different segment of customers. Was it a different set of customers, size-wise? Were they smaller customers that you then brought on board by dropping the setup fee?

James Kane: It did let us access some smaller corners of the market. It affected our mainstream customers as well. We had a lot of clients who knew that doing digital marketing with us was something they had to do. From a cash flow basis, they couldn’t get over the pain of the high setup fees. That was a barrier for them. When you knock the barrier down, it makes them take the plunge.

Sramana Mitra: What did that do in terms of number of customers in the next couple of years?

James Kane: If you go from 2013 to today, we’re at right around 2,300 customers. It ignited a couple of waves of customer acquisition that more than doubled our size.

Sramana Mitra: We are talking 2014?

James Kane: Mid-2013 to today.

Sramana Mitra: I’m a little bit confused. Have we gone from $4.5 million to $10 million in 2016?

James Kane: 2016.

Sramana Mitra: Right now, you’re at about that $10 million range?

James Kane: A little bit over but yes.

Sramana Mitra: In the discussion we’ve had so far, have you touched upon all the major strategic tweaks and adjustments that you’ve made to grow this business or did we miss anything?

James Kane: The only thing that we really didn’t touch on is that at one point, we went to market through a reseller partially. During this time, we dropped that arrangement. It’s not particularly fascinating but we used to have resellers. Now, we don’t.

Sramana Mitra: Talk about the team. How did that evolve and in what time frame?

James Kane: Our team has been growing steadily over the years. Any real jump or spike goes with revenues. We went from three. Right now, we’re at just shy of 60 people.

Sramana Mitra: All in one location?

James Kane: We have a couple of employees who work remotely. At our primary location, we have 55.

Sramana Mitra: Thank you for your time.

This segment is part 6 in the series : Bootstrapping Using Services: James Kane, CEO of RWS
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