This Entrepreneur Raised $100 Million To Streamline Your Business Processes
Jakob Freund’s business has grown from a small services business to large venture backed enterprise with customers like NASA.
On the Dealmakers Show Freund shared how he transformed and scaled his company. We talked about his success in coding an organization, building your credibility and generating early customers, and how long to test your idea before giving up or going all in. Plus, we covered the open-core business model, when to raise money and the art of leadership.
Jakob Freund was born and grew up in Berlin. He found his love for technology on his accountant father’s home computer before he hit 10 years old.
He was not about to buy him any computer games to play on it. Though he did offer to teach him to code. He began by programming calculators. Then discovered he could program his own games. He even boxed it and printed labels so he could sell it to friends and family. Though it wasn’t exactly a viral hit.
This led him to study business IT in college. He immediately gained a passion for business process management, designing workflows and automation.
His first job out of university put him in a project manager and consulting role. Though he spent his nights and weekends working on his passion for BPM. He created a website on the topics and began creating a community and forum.
This ended up connecting him with his current cofounder who he teamed up with to begin working with in this space.
It was still early for what they were working on, so they decided to write a book on it, and educate others. It became pretty successful, and gave them credibility and early leads to begin building their consulting business. These initial customers turned into references which they could leverage into even more.
Their customers were pretty large, ranging from 1k to 10k employees. Though they still hadn’t struck on something which was scalable. They had tried building and selling a few types of software to make that leap. They had several failures.
For five years Jakob and his cofounder really relied on their consulting work as they tested software ideas and ways to scale.
Finally, they struck on an idea to provide support on top of some existing open source technology, and to create additional revenue with their own tool on top of that.
They decided to give themselves 12 months to see if it would work. Setting a goal of 10 plus customers to prove the concept.
Jakob says “You don’t want to give up too quickly. Then, again, when you’re beating a dead horse, you should get off that horse too.” His solution for deciding the difference was to give themselves a clear timebox.
Many ideas may give themselves tighter timeboxes. In this case, they were going after large enterprise sized organizations. Companies that can take 12 months to make a purchasing decision, with a lot of red tape.
This time they hit their 12 month sales goal in just six months, and decided to go all in on it.
Today, Jakob’s startup Camunda runs on what he calls an ‘open-core’ business model.
This means the core of their business is a free open source platform that anyone can use. Like NASA does for their work on Mars. Other large customers choose to pay for their commercial version, with extra features and support.
Today, their annual fees for this product can run into millions of dollars. Yet Freund says they also choose to give away software access for free to causes they care about, from human rights to fighting climate change.
Camunda has now raised around $100M through their Series B round.
Rather unconventionally for startups today, Camunda didn’t take in their first round of capital for 10 years, and until they had more than $10M in annual revenues.
Obviously, by that point VCs were hunting them down and cold prospecting them. In these scenarios some founders worry about giving up too much information. Especially when these firms are also soliciting all of their competitors.
Jakob says he didn’t have those reservations. Instead he says “don’t be afraid of giving away too much information. Focus on your strength, on your customers, the market, and be fast in executing in all that matters.” Your execution can set you apart.
So, why finally take capital after so long, especially when you are already profitable? Jakob says that he had spent some time in San Francisco which really opened up his mind to new ways of seeing things and the startup ecosystem.
Then he also saw that going from a team of 20 to maybe 2,000 one day would help them magnify their impact. They decided to take the money when they didn’t need it, versus waiting to be in a position to try and run an outbound fundraising process when they needed the money.
Negotiations and terms are always in your favor when you can do this.
Today, Camunda has over 300 employees spread across Germany, the United States, Australia, Singapore and the UK.
They see a future in which their technology facilitates the automation of any business process you are running.
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