My guests today are Steve Lau and Rameez Ansari, co-CEOs of AutoLeap, a cloud-based auto repair shop platform that counts Bain Capital Ventures among its investors.
Prior to founding AutoLeap, Steve and Rameez purchased, operated, and sold D’Esco (later renamed FieldEdge), a software company that helps entrepreneurs run their HVAC, Plumbing, and Electrical Contracting businesses. Steve and Rameez purchased the company from its original founder in 2015 at 5X EBITDA, when its product was entirely on-premise and its revenue was generated solely through the sale of perpetual use licenses. After successfully transitioning the company to one that sold a cloud-based product on a subscription basis, they sold the company to a private equity firm for 8X revenue in 2019.
Steve Lau earned his MBA from the Wharton School at the University of Pennsylvania, and his BBA from the University of Toronto. He was named as one of Canada’s “Top 40 Under 40” in 2019.
Rameez Ansari earned his MBA from the Stanford Graduate School of Business, and his BBA from the University of Toronto where he graduated with high distinction.
Steve & Rameez were named EY Entrepreneurs Of The Year in 2018 for the state of Florida.
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Buy at 5X EBITDA, Sell at 8X Revenue: The On-Premise to SaaS Transition of FieldEdge – In The Trenches
Specific Questions and When They’re Asked
- (4:08) Please provide us with a brief background on yourselves and your experience
- (7:51) What the difference is between on-premise and SaaS software, and why the latter is generally preferable to the former?
- (13:18) Under what circumstances, if any, you would not recommend making a transition to SaaS? When might it be best, if ever, to leave the on-prem software as is?
- (18:28) How did you think about how much to invest in your ‘old’ product vs. how much to invest in your ‘new’ product?
- (21:23) How did you manage pushback from existing customers stemming from fewer new features being built within the on-prem product that they were using at the time?
- (24:11) How did your investment decisions between the “new” and “old” products impact customer retention, if at all?
- (25:00) For how long did you continue to sell your on-prem product? What did you learn from asking your sales team to sell both products?
- (27:33) Was there any change in the market into which you sold it early versions of the new SaaS product? Or do you immediately target the same portion of the market that had been purchasing your on-premise product?
- (30:30) Who did you entrust to build the new SaaS product? The same development team that built the old on-premise product, or did it require an entirely new team?
- (37:35) How did you change the comp plans of your sales team to incent the behaviors that you were looking for? Did you encounter any unanticipated challenges?
- (46:14) How did you arrive at the initial price for the first iteration of the SaaS product?
- (48:40) Did the price of the new product have any relation to the price of the old product? Why or why not?
- (51:23) What percentage of your on-prem customers ended up converting to the new SaaS product? How did that differ from your initial expectations?
- (53:09) Did you explicitly target feature/function parity with your on-prem product, or did you think about feature development (specific to SaaS) in a different way?
- (57:58) How did you initially communicate the need to make such a drastic change the organization? Did you receive any blowback from that initial communication?
- (1:02:20) What are your major mistakes, regrets, or things that you would do differently if given the opportunity to do so again?
- (1:09:05) Knowing what you know, under what circumstances would you invest in a company looking to pursue a similar on-prem to SaaS transition? Under what circumstances might you not invest in such an opportunity?
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- Migrating Your Software Company from On-Premise to SaaS: Part 1
- Migrating Your Software Company from On-Premise to SaaS: Part 2