Wednesday, July 15, 2015
Chrome River: Building An Enterprise Software Leader In LA, with Dave Terry
Story by Benjamin F. Kuo
A few weeks ago, Los Angeles-based enterprise expense reporting software maker Chrome River (www.chromeriver.com) took a significant venture funding round--worth $100M--to help expand the company's growth in the enterprise software market. We caught up with co-founder Dave Terry, who co-founded Chrome River with Alan Rich, to learn more about how the company has build one of the fastest growing enterprise software makers in the area, why the company raised such a big round, and why the company is seeing a big opportunity in its market.
What does Chrome River's software do?
Dave Terry: The best way to sum it up, is Chrome River automates the labor intensive, error prone, and typically manual workflow processes around expense reporting and supplier invoice management. It's software-as-a-service based, and we have organizations worldwide, from very small companies, to 100 employees and up, to Fortune 500 companies, across a wide variety of industries.
What's the background on the company, and how did you start?
Dave Terry: Alan and I both have been focused on legal and financial management systems in our career. We came from the financial industry space, and have been developing large ERP systems for large law firms around the globe. In doing that, we found that most of the sophisticated law firms were automating their expense management. There were a few vendors in the area, and we had partnered with one of them for a number of years, Extensity, which later was acquired by Infor. Their main competitor also changed hands a few times. Both of those solutions were leap-frogged by Concur, which is now the big known brand name here. They've done a fanstic job moving through the space, and educating the market about expense management and reporting. However, our customers, even with Concur, find those solutions didn't meet all of their needs. In particular, the law firm sector has more challenging requirements, organizational matrix structures. After we left the company we were working for, Elite Information Systems--which was later acquired by Thompson, Alan and I formed Chrome River. The company was formed with this business proposition, that we could apply newer, later technology, and create something that was highly configurable and flexible. We formed the company in 2007, came out with our first product in late 2008, and began selling in earnest in 2009. In 2009, we immediately approached the law firm market because we knew it so well, and because we had lots of relationships from over the years. We gained quite a number of customers very rapidly, and have 60 percent of the global top 100 legal firms in the world now using our system. We've now branched out horizontally into all industry verticals. We're now taking the same solutions around the globe, and finding companies in the sports, entertainment, manufacturing, large automotive companies, and the Fortune 500 acquiring and using Chrome River.
You've seen some very impressive growth over the past few years, can you talk about how that has happened?
Dave Terry: We've been very fortune. We've been on the Inc 500 and 5000 lists for four years, and were recognized by the Deloitte Fast 500 for multiple years. I think the reason is, this space has been getting lots of attention. A lot of that credit goes to Concur, which built a fantastic business. When SAP acquired Concur this fall for $8.3 billion, that made a lot of headlines. What that's done, is it's create a large hit in this space, at the top right end of the market. Large enterprise organization had really adopted Concur for their expense management, typically with a few others plus Chrome River. There are man other systems, such as Expensely, ExpenseWire, ExpenseWatch, Expenser, and on and on, but they've all been lower end tools. They're nice tools, but they just don't meet the needs of global, high end companies, with multiple hundred and often thousands of employees around the globe. Those vendors were challenged to meet the needs of large enterprises. Customers would start evaluating them, and it would very quickly narrow to just two companies, us and Concur. With this acquisition, that has put Concur into SAP. That's good and helpful to some companies, but there's a portion of the market which that move has opened up market availability. There are some companies enamored with SAP, but quite a few others not so much. That's given us a lot of the attention in the space. Simultaneously, IBM had a roduct, GERS--Global Expense Reporting System--and they just stepped out of the marketplace. They've told their large enterprise customers they're sunsetting the product in 2016, and with that announcement, we've gotten a large number of their base evaluating our system. Chrome River is picking up a number of those customers. That's led to continuous growth over the last several years, and a spike more recently.
Can you talk about the reason you guys went out for this latest round, given your growth?
Dave Terry: We originally were self funded until 2012, when we took a very low investment. We thought we should put some more fuel on the fire, so we took a small round of $3M. We use that for 12-14 months, and found it worked really well, because it helped to have that extra capital to grow the business more rapidly. That got us the attention of Bain Capital Ventures for our next round, which, combined with our prior investors, gave us another $17M, for about a total of $20M in investment. That went equally well, and we found that extra capital really us grow. For an enterprise software organization like ours, that means growing the company proportionally across all departments. It's not about pouring those dollars into a hundred new sales reps and just selling the heck out of things--as an enterprise player, you have to grow sales in accordance with engineering and our QA department, with implementation services, and support. All of those are equally important to our large customers, to keep them satisfied and reference-able. So, took a balanced approach with that new round from Bain, which also proved very successful. We decided, with the current state of the market, and the changes which have gone on for six to nine months, with IBM stepping away, with the acquisition of Concur, that there was no one competing head to head with Concur. We though someone needed to step through that window, and it might as well be us. We went out to test the market, checked in with growth investment providers, and got lots of interest. They evaluated the same market, and were equally enthusiastic about the opportunity. That large round allows us to jump into the enterprise space, and compete at the high end.
How did you end up building an enterprise software company in Los Angeles?
Dave Terry: It's just part of our heritage. We also knew that in Los Angeles, there were lots of folks and resources in the area to help us build our next company. It's been really fantastic, and we've really enjoyed it. We do have sales people out in the field, along with our implementation people, and we have an office in London as well and are expanding internationally. However, our headquarters here is in Los Angeles, and we're growing. In fact, we've grown so much we've moved six times, so far always in the same building. We're really fortune to have a nice relationship here at Museum Square, near Miracle Mile and Wilshire and La Brea. Looking at this growth, if we have to move, we are hoping to continue to find space in this same area. It's more of the entertainment and media side of town, however, it's a very vibrant place. It's been a great fortune for our employees to enjoy this area, taking advantage of everything around here.
How big is the company now, employee-wise?
Dave Terry: We're up to 140 employees.
Finally, what's next for the company?
Dave Terry: Continued, balanced growth. We're going to use this funding in the normal, expected way--international expansion, continued growth of our resources, and more and more, and larger, customers. We'll also be building up new and exciting products. We've got some fantastic ideas on how to expand expense reporting and automation, extend that to the mobile space with the latest mobile technology, use things like OCR for data extraction, and we're also building out some sophisticated analytic tools which will help business owners analyze their expenses and spend.