At that point, outside of the Globalscape deal, I was discouraged enough trying to sell a $30/month SaaS product to small businesses through their web design agencies.
JB: What did you do with the $200K?
DC: I re-hired the classmates from the previous summer to build something more substantial. We didn’t want to do the small business product any more…
JB: Self sign on hadn’t caught on yet?
DC: SaaS hadn’t caught on yet.
We both start laughing
SaaS really came into its own in ‘07 or ‘08. The great recession really made it so big IT spend went out the window. The great recession really helped the adoption of SaaS because you don’t want to pay $100K upfront, you want to pay $2,000/month forever.
This was way before primetime SaaS.
So I take the $200K with my classmates, and start from scratch a new product from the ground up. That product is called Cascade Server which is the product Hannon Hill still sells today and it’s been wildly successful.
KB: What type of time commitment are you putting into this?
DC: 16 hour days, all day, 7 days a week.
Cascade Server was a new content management system built from the ground up, but this was built in Java where the previous one was built in PHP, and Cascade Server was an installed enterprise app, it was not SaaS. So this is heavy duty, powerful software you install on your own server.
JB: Why did you decide to move the company to Atlanta?
DC: At the time, my biggest web design customer was also my biggest Super Update customer. They were a private equity hotel group in Atlanta. I reached out to my contact who was our customer and said, “We’re looking to make a move to Atlanta.” I had always liked Atlanta because it was the city I was used to going to growing up in North Florida. The Braves, airport, Six Flags, shopping, etc. All of these are reasons I visited Atlanta a bunch growing up.
When I called up our customer, he said they had two empty rooms in the back of their office that we could use. At the time, he was on the 11th floor of the Monarch Tower, which is attached to the Ritz-Carlton and looks out over Lenox and Phipps, class A building. That building was built in ‘98 so it was only four years old and there was an apartment complex right across the street. Once I saw all of that, I was sold.
JB: When did you get your first paying customer for the Cascade Server product?
DC: We started writing the new product in Java from scratch in May of 2002 and it was really early 2003. At this time, I still didn’t have a clue about customer acquisition and go-to-market.
JB: When did it finally hit you that picking up the phone was important?
DC: I did some cold calling for Super Update in Durham to design agencies and that failed for a lot of different reasons.
But in 2003, we had a little bit of money in the bank, I had hired an amazing senior software engineer I found through Craigslist and then Summer of 2003, I got a really smart Emory intern—a CS major—and then another other buddy from Emory who was on the product management side. It was really us three and the intern for most of 2003.
JB: Somewhere in 2003 is when you got your first customer?
DC: Correct, we got a customer in 2003, which wasn’t that big at the time. A few customers started using us for their intranet. I started doing some Google Adwords ads for content management and I got Eckerd College down in Florida to sign up.
JB: How much were those deals?
DC: They were around $20K, paid upfront.
JB: Did you have to go down to Florida to implement?
DC: I did not. Sold it over the phone.
Over the next few months, we landed a few more customers through calling and Google Adwords.
JB: At this point, did you feel like you were on to something?
DC: Once we got to $50K of product revenue for a customer, I felt like we were on to something. Raising prices was a big breakthrough.
Then we had a little bit of cash and hired two Emory interns to be cold callers and got a referral from a family friend to hire Blaine Herman, who now has gone off to start his own company which is doing very well.
Since two of the five first paying customers were colleges, we decided to double down on colleges and universities. We went to Barnes and Nobles in Buckhead and bought a massive book with all of them listed out: two year, four year, public and private, all listed out. There is 4,160 or there was at the time and we all started dialing for dollars and it worked amazingly well.
I did about 1,000 demos. 50% of my time was doing demos set up by the team.
It was good fortune the ratios worked around ACV, CAC and other SaaS metrics we all know well today. But at the time, we weren’t paying attention to that, we were just working as hard as possible and as smart or semi-smart as possible.
We were blanketing colleges all over the United States.
JB: What did your annual revenue numbers look like?
DC: 2003 was probably $20K-$30K of revenue. In 2004, call it $200K in revenue maybe $300K. In 2005 we went to $1.2 Million in revenue. In 2006, we did $2.4 Million.
The beautiful thing about this revenue was it was all prepaid and upfront which helped us reinvest into the business quicker.
JB: Did you ever think about raising money?
DC: I talked to ATA (Atlanta Technology Angels) and multiple angels in the area and they had no interest. This was ‘05 and ‘06, the real estate market was booming and at the time, I was 25. So you have this 25 year old with a million dollar revenue, enterprise software installed content management business—it just wasn’t interesting to people.
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Today, Hannon Hill continues to thrive out of the Atlanta Tech Village with a team of 30 people. Over the last 18 years, Hannon Hill has sold tens of millions of dollars of software and continues to grow every year.
Hannon Hill is the story that rarely gets told. People hear the Pardot story, the Atlanta Tech Village story, and more, but Hannon Hill was the spark that set it off.
After Cummings exited Pardot, $500,000 was donated to Duke in honor of Professor Frank Borchardt, who passed away in 2007, which turns into $20K a year forever to the top undergraduate entrepreneur as a gift in his name. Duke entrepreneurship leaders select the top startup.
Every year, a Duke undergrad gets the equivalent of what he received from Frank and non-dilutive.
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