Wednesday, April 5, 2017
How Liferay Grew To More Than $100M After Starting In A Church Basement
Story by Benjamin F. Kuo
Diamond Bar-based Liferay (www.liferay.com) is a company that not too many people have heard of, but which is used to run the websites for such well known organizations like Toyota, T-Mobile, Coach, Fujitsu, Allianz, and Sesame Street. And, even more impressively, it's now seeing more than $100M in annual revenues--without ever having taken any institutional or venture capital. We spoke with CEO Bryan Cheung to learn more about Liferay, and how it grew from a church basement and open source to $100M+ in revenues, without ever taking outside capital.
What is LifeRay?
Bryan Cheung: We're an enterprise software company. We focus on digital transformation and customer experience. Digital transformation is how businesses use technology to change their value proposition to customers, which can be anything from a completely new business model, like you see with Airbnb, or how insurance companies are using telematics to charge insurance by the mile, to how companies are using tracking devices to help empower patient wellness and incorporate preventative care. Technology is transforming every aspect of business, and our technology is one piece of the puzzle that helps them get there.
Can you explain that in a more concrete way?
Bryan Cheung: What we're specifically doing, is a product called the LifeRay digital experience platform. We provide everything from your website, to your mobile app, to your kiosk in an in-preson environment. We have a heritage in enterprise portals, content management, and middleware, and we help you connect to your back end systems and present all of this to the user in a great experience, which connects across all of those different touch points on their journey.
How did the company start?
Bryan Cheung: Our two software architects had worked on this for four years, before starting the company. They both attended a church called the Gatweay in Diamond Bar. One of them was a volunteer there, and he figured out there was empty space there not being used during the week, and started using that for the company. In the early, early days, he technically worked in his own garage, and they started doing this consulting for clients.
How did the shift come from consulting services to a product?
Bryan Cheung: In 2009, we switch to a subscription model. We would provide maintenance updates for the software, and we had integrators do the implementation. It was a pretty scary transition to make, because, in a way, we were killing off a revenue stream that we had before. However, we'd seen a number of companies make that transition, such as MySQL, and we felt we were moving in good company. In the last seven years, w've been able to scale the company much more rapidly than we would have in the consulting business.
How is it you made it to $100M in revenues without outside investment?
Bryan Cheung: Honestly, I think one of the things we realized early on with open source softawre, is lots of the time people are attracted to that because they want to be on the cutting edge. They're perfect fine upgrading to the latest version of the software, and applying fixes themselves. However, they tend to be maverick developers in a large organization, or working independently. Early on, when we were consulting, that tended to be agile organizations, or at least those who weren't afraid to be on the cutting edge. However, as the business grew, we found that our clients were becoming more established or mature companies, who did not want the latest and greatest, but wanted the most stable software. Our engineering process had to change, so that, instead of only having the single version of the latest and greatest, we created branches of software more suitable for a production environment. That was the reason people purchased subscriptions. They loved to have a specific software version, and keep on using that version over many years. Once you do that, the dynamics change. You're no longer mixing future development and bug fixes in a single branch, you're getting that branch really, really stable. When you start doing that, you create an offering that can be purchased by more customers, and that becomes easier to maintain for us. It's really just about being able to make fixes and updates, without introducing new features. That has allowed us to scale, and focus on recurring revenues, rather than one-off consulting. That changed the profile of folks we hired, and because of that we've been able to grow in the last seven years to nearly 10X in terms of revenue.
What's the biggest lesson you've learned so far taking this from startup to $100M?
Bryan Cheung: There are many lessons. I think we've been willing to do things differently, partly because we're based in Diamond Bar, haven't been talking to venture capitalists, and generally being in Los Angeles and being counter-cultural. Pretty early on, we had a strong sense of purpose and vision, and wanted to build a business that had a positive impact in the local community, and in the global community. There are something like 110 different ways for someone to make money, whether that might be investing in the stock market or real estate, building a Silicon Valley company and flipping it. However, I don't think a lot of those are suitable ways that provide overarching value over a long period of time or a lifetime. I think if you look at most big problems today, they are not solved by money, although money helps. They are solved by people investing time and energy, by people giving other opportunities, by creating jobs, educating people, and pushing the envelope in terms of what's possible with human potential. For us, LifeRay was always about how we could grow the company without taking investments. It's not about flipping a company, or growing to a crazy valuation in a short period of time. It's been about spending money as if it's your own money, hiring the people who have the right character and fit to the culture of the company. Just one bad person on a team is going to make people unproductive, and we couldn't afford to do that. We learned how to grow organically, be a purpose-led company, and drown out the noise of “everyone else is doing this”, pressure from investors, and all of that. We have learned to get pretty good at following our instincts, and doing things our own way.
Given the attraction of stock options at startups to employees and quick exits and IPOs, how do you recruit and keep employees?
Bryan Cheung: I want LifeRay to be a lucrative place to work, and I want people to be rewarded for their talent and performance, and we try our best to do that. But I think we attract people who are not motivated by getting rich quick on stock options. We have a pretty good retention rate, over 90 to 95 percent. The people who started with us in 2005 and 2006 are still with us, and there is a lot of longevity in the company, and familiarity and teamwork that comes from working together for so long that you don't find at other companies. We also take a very human approach to good work-life balance, and want our employees to spend time with their families. We never put profit or results over human relationships. That's a very valuable value proposition in terms of a career and work environment. For people who share our vision and values, we're absolutely the right place to be.
Finally, what's next on the horizon for you?
Bryan Cheung: We've been operating for about thirteen years now, and we love what we're doing. 2017 will be a great year for us. We just launched our new product last year, and we're competing with product like Adobe's Marketing Cloud and SiteCore. We see the industry going towards looking at the customer experience from end-to-end, and not just selling things to people, but taking care of the relationships, from when they're a prospect, to a customer to an advocate. That's really where most large companies are going. It's about the customer life cycle, and taking a single view of your customer. And we're doing that in a way that we're building a company in an ethical way, and building our technology that way. It's not about taking people's data, and using it in a way that's not in their best interest. A vendor has to respects what's best for the customers, and help those customers. There's a huge convergence in our market, between content management portals and e-commerce technology, and I think we're one of the leaders in the space, with the opportunity to break out to larger markets than the ones we've been playing in.
Thanks, and good luck!