#20 - Started as a Bootstrapped, now VC funded.
Oleg Shilovetsky / Co-Founder of OpenBOM
Thanks to LinkedIn, I met with Oleg and to be honest, he is one of the most experienced SaaS founders I have seen.
He knows the critical factors of building a business and I learned so many things in a short period from his sharings.
He has 20+ years in manufacturing space and he knows what most companies need in terms of digital transformation. And that’s why he started OpenBOM.
He started as a bootstrapped and then raised $4M funding. In this interview he also shared why he received that money.
Hope you like it.
Weekly News:
Last week, SaaSOpen happened at Austin which was organized by Nathan Latka mainly for bootstrappers and you can get access to speakers’ slides by rt’ing and commenting the post Latka shared on LinkedIn. Here is the link to it.
One of the well-known B2B bootstrappers on LinkedIn - Adam Robinson - shared why the traditional VC model is dead. Here is the link to it.
As we talked earlier, you raised some funding for your company but your mindset is bootstrapped. So today we are going to talk related to that. But before that, you can give us some details about your background first.
Sure. Of course. My background comes from development of software for engineering manufacturing companies I was involved in product data management and product life cycle management for the last 20+ years, I was working for a couple of very large software vendors in the space.
I worked for the dassault systems and I also worked for Autodesk. I was around a few startups and one of them was my company that was acquired by Autodesk. So I've been worked a lot with the engineering and manufacturing companies.
Also, I have my professional blog called Beyond PLM for the last 15 years. I'm publishing from two to four articles every week on my blog. So it's a part of me sharing knowledge with the community, with people that are looking for this knowledge.
How did your journey start with OpenBOM?
It's a combination of pain and experience. So I've been involved in the development of product lifecycle management systems from manufacturing companies. I've learned a lot in doing this for software vendors. I was running teams.
And manufacturing companies that came to me for advice, for different kinds of questions about how to do and what to do. So I've seen the opportunity and the only thing that you technically can’t change when you decide that you want to start a business is timing.
Because you can decide where to sell. You can decide what to do. You can decide even how you build a company, but timing you can achieve.
So, and the timing is something that I've learned really important because the greatest technology, bad timing will be bad.
And the average technology in good timing can be actually something that, will like, if you don't have timing, if you don't have a market.
Those are the things that are very hard to change. I mean, you technically can not change them. So the reason why investors are always asking you about market because they know if they don't have a market, like whatever you put money in and they're brilliant things you do, I do not sell.
So what I've seen is that, we do have a momentum.
In manufacturing, which indicates that the companies are transforming and digital transformation is what is happening in the companies. Like, if you take a look on perspective, I like this example because it's very kind of well, easy to understand to everyone.
“Like 30 years ago, I was going to my road trips in the car and I took a book, which was the paper map and my wife was sitting next to me and saying, now you need to take a turn and here's the gas station.
And this is where we can go. I mean, the all information was paper, analog.
Now we go into the trips, we get the everything planned in the phone, we stack the phone in the car, and then we can go. Now, in some places you can just immerse, immerse yourself in the navigation experience.
This is the 30 years of digital transformation of driving experience.
And in this process, this was a lot of companies; someone invented how to make maps, someone invented how to track traffic and how someone just brought local business information and combine it together in the overall. So it was a lot of digital transformation. So what happens now in the manufacturing business is the same.
I mean, it's not about maps, but it's about a lot of information. That is happening in the companies. The companies are figuring out how to work with each other. Companies are figuring out how to define the risks of supply chain and companies are figuring out how to connect information about what you do in the company with what your customers need.
So just to summarize; OpenBom is like the digital transformation of manufacturing space at the moment. And you started this in 2016.
We've been talking to potential customers who've been experimenting with technology effectively. We started to sell in 2019.
And in that three years, you raised some funding there?
Yeah, we raised some funding. It was a lot of transformation for the company.
But what about your mindset is like? Bootstrapped?
Our mindset is how to drive adoption. So one of the interesting lessons that I've learned is that; in the business of manufacturing, manufacturing companies are very conservative and there is a kind of perception that engineers are creating great products, very innovative products, always on the edge of the technology, but what people are not saying very often is that engineers are super conservative, conservative when it comes to their tools.
So let's put it this way.
So manufacturing companies developing great new products. And very often they build it using Excel and managing data in very old-generation forms. It is because, it's the reality.
So, and they use some of the products because they like and use it for ages.
So it is a very interesting kind of difference and because engineering; manufacturing companies are changing very slowly traditionally.
If a manufacturing company is doing something they're profitable and you know, their intention is when someone is coming to them and saying we can change something.
They say, I do it for the last 40 years and I'm profitable. Why do you want me to change something? What will happen tomorrow that didn't happen for the last 40 years.
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Yeah in that case I mean it should it seem like it's hard to convince those people to use your solution, right? Because they have been using the previous model maybe 20 years, 30 years. And what are the obstacles you had in that case? Because it's hard to change people's minds.
Just wondering about the things that you had and your unique selling points. Would you like to share?
Of course. Yeah, that's very important. Again, it's very important observation but it's hard to convince people that nothing is changing. So this is why I'm saying the world is changing, but the world around those people is changing.
And just think about a great company called Kodak. They look great. But, where are they now? So another great company called Nokia. Everyone was using Nokia phones. Where are these companies now? So there are a few other great examples of companies that existed.
So when the world is changing and they need to figure it out. So that's why I said timing is everything. So, and that's why the greatest news for us was COVID as much as it, like I said, the experience for everyone, a world is changing because everyone is moving into different parts, like the shake that happened to shake out.
That happened with COVID that helped everyone to understand that they need to have a digital strategy.
So that means you need to have new tools that's something that brings a change. And today it's a big good thing that happened. Like it's all online and everyone is going to distribute.
As you know we have some bootstrapped subscribers and also some VC funding firms. They would like to hear more about your story.
You have 15 employees at the moment, many badges from G2 and it looks like you have been doing great things from your end. What do you recommend for companies like you?
It can be employee wise, company wise. So i'm just wondering about your case here because I think there is a great use case behind your story
It was people people told before me a lot and I want to come back to this again and again.
The companies are not failing not because they do something wrong in the wrong way.
The companies are failing because they do something that people don't need. That's the most important thing.
So the problem with all founders, including myself, I'm not like many others is that we are very much preoccupied with our ideas. And because we are very much preoccupied with our ideas, we have a tendency to invent new stuff.
And as a result of this, we believe into this a lot. And sometimes we feel that because we believe, it's an important thing. Okay. So it's a very sensitive topic. You need to figure out and you need to get people to tell you that you actually did what they did. And that's the place where a lot of founders are making mistakes.
So you need to be brutal about finding customers and getting their responses. And analyzing those responses and making decisions in judgement of the results without being influenced by different events that obviously will happen to everyone. Because look, you're inventing something or you're trying to do something.
And you want to grow it by not without using artificial accelerators, like it's a lot of money. So a lot of money can hide some of the problems because you can sell a lot if you invest a lot of money and you can create something always by selling a lot of marketing because you can get artificial. Okay, you can get some results that not reflecting the reality and I'm not saying that you don't need money.
You need money, you know, it's obviously to have funds. We need it as well. So, but for companies, the first thing they need to focus on is customers.
I see. You mentioned that; need, timing and customers are crucial, right? Three things are crucial for a company when they start doing something new.
Anything that you would like to add for bootstrappers and other people? Maybe a recommendation from your end in terms of books, podcasts?
Books, just Google, you know, there are a lot of people that sharing a lot of information. So not necessarily what works, what works for you might not work for someone else.
Don't believe people that telling them they know, because they don't judge people and their recommendations by their achievements.That's why I would recommend to everyone to experiment.
And what did they do? Like when someone is telling you. Take a look at what they actually did. That's where this is very important thing. And the most important thing is just don't give up because it's been said by many people, but I mean, it's not easy, like no matter how great successful you will be, it's a super lonely job.
It's boring. Although everyone didn't say any great stories, like how fun it was. After all, you will be measured by the sales results, how much you sell, and how it will grow, and then you will need to invent how it will work.
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