During COFES 2010 I sat down with SpaceClaim CEO Chris Randles and Co-founder Blake Courter to discuss the company, the product, their strategy and a few other things. We spoke for over an hour. So I am going to split the conversation into parts. This is the first one.
Deelip: Recently you disclosed some pretty impressive percentage numbers, 253% year-over-year increase in sales and a 188% increase in new licenses. Percentages only serve to show a trend and it looks like the trend is good for SpaceClaim. However, I was wondering what percentage of your sales was due to your OEM deals with ANSYS and Flow International.
Chris: Yes, I read your blog post on that and I looked up the numbers. To answer your question, in 2009 the revenue from our OEM business with ANSYS and Flow International was less than half of one percent. I understand your point about percentages. It could also mean that we did one dollar in revenue in 2008. However, I do not want to discredit our OEM partnerships because, for instance, our business with ANSYS really took shape towards the end of 2009. We announced our relationship with September but ANSYS 12.1 was out only in December. That’s why the percentage I mentioned is so low. Moreover, in the OEM business your numbers are actually a look in the rear view mirror, since your numbers show up after a quarter. We actually grew over 500% in Q1 of 2010. So while I am not going to disclose any numbers, if we continue to grow by three or six fold, then eventually we are going to have to talk about real numbers.
I would say that we have gone from being a start up to an early stage company. If you were looking at us from an investment point view, you would say we are in the growth stage. We are within sight of cash flow profitability. We are not profitable yet, but we expect to be within our planning horizon.
Blake: It’s kind of a funny thing. I was thinking about this on the plane. For the first time, it feels to me that our roots are deep enough that we are not going to get blown away. We may grow at a fast rate or not. But it feels like we cannot really be dislodged anymore. Its just a feeling.
Deelip: So I assume this is not a feeling that you had say about a year ago.
Chris: Well, SpaceClaim went to market in 2007. I joined the company in late 2008. So my comments on that are not from a ring side seat. But I think essentially SpaceClaim went to market too early. The product was a great invention. But it wasn’t ready in 2007. In 2008, that product became ready.
Deelip: When you say ready, what exactly do you mean? Are you talking from a technical standpoint or from a marketing standpoint or something else?
Chris: I mean it wasn’t sufficiently well rounded. You are a programming and have done software development. You have built a product. Say you build an alpha and then you build a beta. That maybe bug free and… well, I am not saying tha they went to market with an alpha product. But at the same time, as soon as you get it out in the market, you say well, it’s nice but it really needs four wheels and not three wheels and it needs added capabilities. I think that was really a first version. I think in 2008 that product became production ready, industrial strength, well rounded enough. But it also began to have a real focus. That’s the difference between an invention and a product. An invention is a little unfocussed and a product is clearly focussed.
Part 2 >>