Hans´ war story: Inside the Tornado Growth
The right business model generated "inside the tornado" growth.
Even if we had a great vision for StreamServe from the very beginning we did not expect to be in a state of explosive growth in just a few years. We went from being a small start up firm to a company with revenues of $40 million in just four years. Furthermore, 80% of the revenues came from markets outside Sweden and we obtained more than 2000 large and midsize companies as customers.
How did it happen? Like every successful start-up company there are four pillars that enable growth; an underserved market, a competitive product/service, a complementary team of talented and driven people and - a scalable business model.
When we had the evidence that StreamServe´s enterprise software was in great demand from large and midsize enterprises we focused all our efforts on creating a scalable business model. We realized that selling direct would be to slow to capitalize fully on the market opportunity. A traditional partner model would diminish our control and an OEM model would put us too far down in the value chain.
Our objective became to create a business model that would keep us in the driving seat as a direct sales model does and have the same growth leverage as a successful OEM model.
The final step was to give away a valuable piece of functionality of our enterprise applications to ERP vendors. Our request in return was that they integrated not only the free of charge functionality, but our full product suite into their core product. We also negotiated a revenue split with the ERP vendors if they gave us access to their customer base. We called the business model internally a "friendly Trojan Horse", a win-win proposal for all parties.
After 18 months of negotiations and proof of concepts we closed our first agreement with a major ERP vendor and thereafter others followed.
The business model worked as planned and StreamServe leapt to "inside the tornado" growth. The model gave us multiple advantages. We sold in our own name but leveraged the credibility and established contacts of the ERP vendors. The pre-integration of our applications significantly lowered the barrier for companies beginning to use our applications.
Furthermore, StreamServe's internationalization became very focused and cost efficient. Our newly started subsidiaries in Europe did not have to begin generating prospects themselves. Along with a targeted sales pitch we delivered lists of executives and companies to call.
The world is full of start-ups with great products with sizable markets and talented teams. With the right business model they will be able to become large companies.
