What’s the best way for a small or medium-sized business to move towards a paperless office? Utah’s eFileCabinet (www.efilecabinet.com), which is led by Matt Peterson, thinks it has the right way to help those companies go paperless, through its software, which allows for document management either through Cloud and on-premise installs. We caught up with Matt to learn more about its recent, $14M funding, and also hear about how most SMBs are still making the transition to the cloud—and why the company thinks you still need to support on-premise software for those users.
Tell us about your business and what you do?
Matt Peterson: eFileCabinet is a provider of document management software. We have two platforms, a Cloud-based platform and an on-premise-based platform. We’ve been around for quite some time, since 2001, when we were founded by a CPA. It was primarily designed for the needs of accountants at that time, but fast forward a number of years, and we’ve taken those products and spread into several vertical markets, primarily focused on the paperless office for SMBs. One of the questions we get all the time is how are we different from Box, Dropbox, and the like. What we are seeing right now, is there is a major shift in the landscape, where people are looking for more than just could storage for storing information. Mainly, what that has to do with, is role-based security and functionality, which allows companies to not just store information, but also manage that information, in a compliant way. Our users need to be compliant with things such as HIPAA, rules from FINRA and the SEC, and a variety of others. We help manage and route that information, safeguard it, and let you share that as necessary. Those are some of the things that shine a big light on us, and help SMBs meet their compliance needs, and manage all their file types in a way that makes sense to them.
We see you offer both on-premise and Cloud versions of your software. Where are companies in that transition?
Matt Peterson: What we’re seeing right now, is that everyone in trade publications and the press says everyone is going to the Cloud, and you have to do that. I’d say that people are maybe not being pushed, but they are being nudged towards the Cloud. We agree the Cloud is a great platform, but there is a large contingent of the business community out there, that although they want to go to paperless document management, is not ready for the Cloud. That gives us a unique perspective on this. What we’ve been able to do is allow a lot of people to go paperless, with an on-premise product, knowing full well that they have a path to the Cloud. We create an easy transition for them, and the layout, design, and platform looks nearly identical between our products. One is delivered via browser, and one is delivered as a local application. We have a whole team that just helps convert users from on-premise to Cloud, since we have a lot of customers who have been with a long time with on-premise. About 40 percent of our sales still come from on-premise, usually companies with a large amount of infrastructure they still want on-premise. We don’t want to turn anyone away just because they’re not ready for the Cloud.
Can you talk about this new funding round?
Matt Peterson: The first time we took funding was a Series A back in 2008. It was right before the economy collapsed for the entire country. We took that money, which was with Signal Peak. Part of that funding was to get off the ground and expand our vision beyond accounting, and that was very successful. This last funding is $14M, which we raised from a syndicate that included both Signal Peak and Allegis Capital, out of Palo Alto. We were seeing so much interest in the business, we decided we’d create an even more ubiquitous product. No matter what kind of organization you are, even if you’re outside of our top 5 areas, we want to support you. We’re now selling to school districts, doctor’s offices, car dealerships, and restaurants. We’ve attempted to create a wide appeal for the SMB, so that any organization that has paper files and electronic files can store them in the Cloud. It’s a more affordable solution, because it’s subscription based. We’ve done something a little unique, which is both our on-premise and Cloud products are both subscription, at the same price. It’s a monthly fee, which you can pay for the year or through a three-year contract. That levels the playing field, so when customers are ready to move to the Cloud, they don’t have to change their pricing, and they get the service delivered via a hosted solution versus on-premise.
You mentioned you got your last funding just before the downturn in the economy in 2008. Did you learn any lessons from that?
Matt Peterson: I like to call it a super recession. It wasn’t a depression, but it was pretty close. But, that allowed us to batten down our hatches and fine-tune our product. Instead of bloating our product with features, we only put in what we would be selling. That meant we continued to show success during that time period, particularly given the nature of the economy. It allowed us to focus on what the product could be and the benefits it could provide our existing customers, and also find new customers who were looking for something during that downturn to help them become more efficient. Based on the studies, the number one reason companies adopt enterprise content management is because companies are looking for efficiency. The second reason is they are looking for accessibility. So, the reason to look at this product is to make your people more productive, even when they had become leaner due to the recession, in order to allow you to do more with fewer people.
Earlier you mentioned you compete against a number of big, well-funded Silicon Valley players. How do you compete?
Matt Peterson: That’s a good question. We continue to have great success against those Silicon Valley players. The reason why is those companies really considered a consumer play. What we’re finding is many companies don’t allow anything like Box or Dropbox, because of the questions about meeting regulatory requirements. We’re able to capitalize on that. Even when companies do decided to move towards the space we’re in, they’ve so far skipped right over us. If you look at IBM, they totally skipped over SMBs and went to the enterprise. They want to compete against Sharepoint and EMC Documentum. What we’re finding, is there are no national brands in the enterprise content management space for SMBs. Where there are big players, is in the consumer area. The field is wide open for us right now, which is why we are seeing such great success. We’re scaling, we’ve doubled the size of our employees, and we’re going out there as a national brands for all of the vertical markets we serve.