This season will be a series of interesting conversations about how large companies and startups can partner to deliver transformative innovation together.
In our first episode of the fourth season of Agile Giants, we sit down with Greg Coticchia, CEO of Sopheon. Earlier in Greg’s career, he was a serial entrepreneur and participated as an executive in fourteen start-ups (founding four) including being the co-founder & CEO of eBillingHub.
We will discuss his experience scaling a successful company through innovative partnerships with large players in the industry. We start off with a deep dive into a case study of eBillingHub, where Greg shares insights on how the company rapidly scaled and eventually got acquired by Thomson Reuters. We will also explore the importance of partnerships and innovation in entrepreneurship, and how eBillingHub was able to stand out in a crowded market.
In his current role at Sopheon, Greg advises companies on their innovation approaches. We dive into his perspective as a CEO, discussing the challenges and opportunities in helping businesses innovate and stay ahead of the curve.
Whether you’re a startup founder or a corporate innovator, this episode offers valuable insights on how to create meaningful partnerships and drive innovation in your industry. Tune in to learn more!
Sean Ammirati (00:57):
In this week’s episode of Agile Giants, I’m joined by Greg Coticchia, CEO of Sopheon, a publicly traded company that he’ll talk a little bit about later in the episode. But earlier in Greg’s career, he was a serial entrepreneur partnering in 14 startups, founding four of those, and participating as an executive in various size organizations from 39 million to over a billion in revenue.
Sean Ammirati (01:21):
For this season, we’re gonna be focusing on entrepreneurs in traditional startups, working with large corporate partners to deliver transformative innovation together. This will be a series of interesting conversations about how large companies and startups can do this more effectively. In some future episodes, we will actually have case studies where both the startup and the large corporate join together. However, I wanted to start with a case study into a company that Greg was a co-founder and CEO of– eBillingHub, which scaled rapidly thanks to various interesting partnerships with large companies to be more innovative in the legal space, especially Thompson Reuters who eventually acquired the solution. I also want to get his take now advising companies on their innovation approaches with his current role as CEO of Sopheon. Hope you enjoyed this week’s conversation with Greg Coticchia and are looking forward to this upcoming season as much as I am.
Sean Ammirati (02:18):
All right, Greg. Well, I really appreciate you taking the time to join us today. I previewed a little bit of where we’re gonna be going in the intro here. Obviously, we could talk about this from a lot of different perspectives, but I really wanna look at this from two perspectives today. First is the startup that you were involved in eBillingHub, and then I wanna fast forward to today and, and the work you’re doing at Sopheon, but let’s start with, eBillingHub and, I think just a wonderful case study into this corporate-startup partnership. But I think to do that justice, we need to start with an elevator pitch for eBillingHub. So could you just give our audience kind of a quick summary of what eBillingHub was all about?
Greg Coticchia (02:58):
Thank you, Sean. Thanks for having me on Agile Giants. Just as a little context, you know, I’ve been, I’ve been fortunate enough to be in some, you know, zero to billion-dollar early-stage companies that exited nicely. eBillingHub wasn’t that, but it was probably the most rewarding and fun, and exciting startup I’ve ever been involved with. It was an absolute blast. And the timeframe of this, as you know, is the 2006- 2010 time period, right? So, so for your listeners, put a frame of mind, we’ll be talking about some business issues and some technology and some things have changed since then.
Sean Ammirati (03:44):
A few things, a few things have changed.
Greg Coticchia (03:47):
Some of the friction and issues and things that we solved that were very magical then don’t sound as magical today. Anyway, so eBillingHub, to answer your question specifically, we simplified electronic billing for law firms. And what that means is, how they bought technology, how they ran it. And so what was happening in the marketplace is that there were corporate clients of law firms that were adopting electronic billing, just like you would in your personal life, and forcing law firms to submit all bills with detailed electronic billing. So no longer could you put a million dollars due, you know, $750 an hour, pay within 30 days on a paper bill.
Greg Coticchia (04:50):
They wanted everything categorized, detailed, measured, and all submit electronically. Now that sounds great. The problem with that was every law firm had its own, right? They had their own forms, they had their own, their own software. Some built their own, some used third parties. I learned that the average billion-dollar company, private or public, has upwards to 59 outside law firms. So when you start adding up different forms, different things, there’s a lot of complexity, there’s a lot of chaos, all the way down to different ways of logging in and authenticating all problems. So the problem was it was messy. It was confusing. It was error-prone, it was manual. You know, if Betty Joe or Frankie was out for the day or got hit by the proverbial beer truck and they were the only ones that knew how to enter bills, guess what? Bills didn’t get entered. And so it was really a problem, really a big problem. Very messy. So we stepped into that breach, and what we did is we said, “Hey, let’s give them one single interface that they can submit all the bills. Doesn’t matter, we’ll create it. We’ll normalize everything in terms of the data for the forms and everything like that. We’ll check for errors to ensure that it can be submitted successfully. Right? And if there are any changes to forms, we’ll take those on.” So you never have to, we’ll insulate you from all that, right? And we’ll ensure that it goes through. And it was a game changer for law firms, right? But it was early and you are dealing with law firms. So it was not an as, as easy as it sounds today, this obvious, like every other early stage and easy thing that is obvious. It was really hard.
Sean Ammirati (06:49):
Which I think leads to this question, right, of when did you first realize that you needed to partner with groups like Thompson Reuters, right? Because that was, I suspect that was part of solving this being really early problem.
Greg Coticchia (07:03):
It really was on multiple fronts too, Sean. It wasn’t just on the stage of the company. I mean, it, so, so there’s, there’s a few things. Partnerships became absolutely critical. One, because the law firm marketplace is not this gigantic total addressable marketplace, right? It’s, it relatively speaking, it’s big, but relatively speaking, it’s not gonna attract huge investors the way other market spaces are, right? So you couldn’t attract as much money or, or get the valuation that you wanted to build the sales channel that you wanted to build. Number two, it’s a very risk-averse, very mature marketplace with established vendors. It kind of reminded me of my early days when dinosaurs were on the earth, people had certain vendors they used, and they always trusted. I remember going into data centers and people would say, oh, that’s a great product.
Now we’re gonna go check with IBM and see if they have something similar. And if they don’t or, or if they don’t have something that’s even near, then we’ll come back and talk to you. Well, the same thing happened, and it was like 35 years later, you know, people would say to me, I love this product. It’s so great. Can’t wait to get, however, you know, we have a good relationship with Thompson Reuters and we’re gonna see if they have something first, or they’d say, we have a good relationship with, and these vendors may not be as well known to your listeners. And there were about four or five vendors that really owned those relationships with those law firms. And so it was like, wow, we’re, first of all, we’re not gonna recreate those.
Greg Coticchia (08:34):
Second of all, spending money to recreate a sales channel is gonna be very expensive. I mean, so, so what do we do? We either, you know, we were at a point where we proved out that the product could sell, we could compete effectively. We provided value, we had product market fit, all those things. But it was not gonna make sense to build our own channel. It would’ve been too expensive and not worth it, and it still wouldn’t have solved that relationship problem. So we decided, okay, we’ll have some of our own direct sales, but we’re gonna go, primarily, we’re gonna partner with those who were up until that point, really competitors, you know? And that was a scary thing to think about. Someone had their own products in the same space.
Sean Ammirati (09:19):
So let’s go there, let’s go there. So you’re a good salesperson, but that still feels like a large pill to climb. How did you convince groups like Thompson that it was a good idea for them to partner with you?
Greg Coticchia (09:31):
It was scary. I gotta be honest with you, because, you know, at times we had one of those coo-petition relationships, particularly with Thompson being the 800-pound gorilla in the marketplace, where, you know, they would not allow us to be at their, their conferences, you know, where, you know, and even though we were a partner, I remember the guy from Aran telling us that we couldn’t show up at the conference because there was some kind of fire marshal rule that we couldn’t have a hundred people in the room when we would’ve been over the thing. I mean, anything to get them to have us not be there, they would do this.
Greg Coticchia (10:07):
So, you know what it is, you know, I like most things in life, particularly in selling, it comes down to relationships and it comes down to people. And we found a guy inside of Thompson that was a business development guy that was a believer. And he saw the same vision we saw, and he was willing to be our champion. He coached us just like a, just like you would on a large enterprise deal. And the complexity account, he found another guy who was an influencer in product management. And the two of them together really helped us and helped me navigate Thompson Reuters because they didn’t have a big investment in their electronic billing solution. They knew that their electronic billing solution wasn’t as good as ours, but they also knew that they could still beat us, even if it wasn’t as good because they were Thompson Reuters and they owned their relationship.
Greg Coticchia (11:02):
They could add the product for free and still wipe us out, right? I mean, and they did that in certain instances where they said, you know, I’d get a callback and say, well, we’re gonna buy your product. But the Thompson rep, he or she gave us their product for free for a year. So just totally just scorched earth those. But we were able to say, look, let’s make a really good deal for Thompson Reuters where you’re gonna make more money than even owning your own asset. Right? That we had to put it on financial terms that were almost detrimental to us for some period of time just to prove our worth and get the relationship started. And I had to convince people who were investors to, it was over 50% split, which, you know, on on the revenue, which, which, which was high. I mean, I was, was used to anywhere from 15 to 35%. So they were getting an extraordinary cut, right? And we were still, by the way, still very involved in the early selling, you know, cause you gotta help with an, they had lots of products to sell on their channel. So you still have to pay attention. It’s not like let’s educate ’em hand off and the money comes in. Just doesn’t work that way in real life, right?
Sean Ammirati (12:12):
Sure, sure. So, you start with this kind of crazy revenue shared back to them to make it economically irrational for them not to partner with you. Correct. But I suspect that it doesn’t finish there. Like, you, you gotta overtime evolve that. So, so as you, as you went along, like, and you got coaching from these, these, these relationships you had built, like, how did you evolve the relationship such that it was a win for Thompson and it was a win for eBillingHub?
Greg Coticchia (12:44):
Well, we put pressure on everybody, you know, and one of the things is, we had partners from the whole ecosystem. So we didn’t stop with Thompson. And we, we went back and we went to Aran and we went back to Rainmaker. Some of you see this in other product markets. We did special features and special capabilities that were just for that, through that channel, right? And, and that, that was kind of bad news, but it changed the whole playing field. We still were only 10, 15 people, and all of a sudden, cause we were the broker with all the relationships, now, there was, we could create more favorable terms with people and, but we got there.
Sean Ammirati (13:56):
So, so I think that’s, that’s super interesting. From your perspective, how do you think Thompson perceived how that evolved? I wanna kind of get to it before we lead to the next question, which is ultimately the end of this story, which is an acquisition, right? But, before you got to that conversation just as you were this channel partner with multiple channels with multiple partners doing unique features for them. Like, how do you think they were talking about you all at that point, and what made it a win for them at that point?
Greg Coticchia (14:27):
They hated and loved us at the same time, that’s the truth. And I harbored them. I had felt the same way. I’d hated us and loved us. They hated that we were working with their competitors, right? And they loved us because we were generating revenue and value for their customers. And they also saw the opportunity that if they acquired us they had a way into their competitor’s marketplaces. And that was the unique value that they couldn’t get on their own. So all of a sudden everybody was interested. They said, Ooh, now Aran was like, wow, well, if we acquire you, we can get into all those Thompson accounts. We have a relationship with, we have a master contract. So there was value even though there was friction and we had quite a dance for a while. It was quite a dance. But, you know, that leads to your acquisition.
Sean Ammirati (15:23):
The end of the story, right? Yeah. So get to the end of the story here. So this finishes with, with how, how does this wrap up?
Greg Coticchia (15:28):
Well, it wraps, it wraps up with us continuing to drive. Great. You know, we had a different, even pricing model and everything. We were showing value, we were growing. There was the adoption by the customer bases. As I like to say, the salespeople put it in the bag there. The product was in the bag. So first of all, actually Aran came to us first to talk about an acquisition. And you know, you have periods where you can’t shop the deal, right? So we had to be careful where we shop the deal. But then, Thompson came to us.
Greg Coticchia (16:12):
So there was a little bit of a bake-off, which was great. It, it pushed up the valuation and, um, we just felt that the right home for the product was, was, was Thompson Reuters. And today, actually, uh, years later, I had a person that worked for me that ended up going to Thompson Reuters and eBillingHub, ended up being one of her products. She told me this is that it was a hundred million a year product now for them that it had become just such a, such a huge product for them and such an important part of their, uh, uh, portfolio. So, um, it’s a success story. It was a great exit. It wasn’t a big, take it public, then sell. It wasn’t one of those stories that were incredibly satisfying.
Sean Ammirati (16:58):
It sounds like it. And I, so I wanna throw a little curve ball in here that I didn’t prep you for. But just as you’re going through and telling that story, I think an interesting bridge, a lot of that story I think would be incredibly helpful for entrepreneurs listening to this, thinking about how to partner with companies like, these different channels that you partnered with. However, I also think there were a lot of great lessons for Thompson that you alluded to at the end, right? They ultimately, acquired some intellectual property, some technology, some solution space, and a customer base that grew into a meaningful part of their revenue. And so if you were to sort of try to put yourself in the shoes of Thompson for a minute, what do you think are the lessons a company like that would take away from this story, which I think then will naturally transition to talking about what you’re currently doing with Sopheon.
Greg Coticchia (17:50):
You know, I have to give the folks that partnered with us early on, those early champions and guy, two guys that really helped us and coached us through that process. I’ve given a lot of credit because, you know, it’s very risk-averse. You know, they said, hey, we can’t build everything ourselves. We can’t possibly get there all on our own. And this big monolithic package that we have, you know it’s one part of the solution, but we need to actually feed our salespeople with more products and more things to sell besides just bolt-on add-ons, additional features, upgrades, whatever, of this honking big product that we have.
Greg Coticchia (18:53):
So I think it opened their eyes in a lot of ways to, um, being more deliberate about their partnership strategy and looking at it as, you know, okay, that could have stayed as a partnership for a long time, maybe in forever, but also looking at it as a funnel for acquisition, right? And I think, yep, subsequently, they’ve done a lot more, right? Acquisitions, I think we were, you know, the tip of that but it, it did impact that business and how it operated and how it looked at things in terms of build versus buy.
Sean Ammirati (19:40):
Yeah, that’s awesome. So I think that’s, that’s great, right? And that sort of leads to, I mean, there are, there are a bunch of other stops along the way, but that kind of leads to a bridge to what you’re doing now with, with, so, so, uh, people may not be familiar with, with Sopheon. So maybe giving the quick elevator pitch for your solution space there. And then we’ll, we’ll kind of tie back to that with you, with your lens as the CEO of Sopheon
Greg Coticchia (20:03):
A prominent brand, Sopheon is not known?
Sean Ammirati (20:09):
Well, I, I mean, I heard the brand equity has gone up significantly since you sponsored the Corporate Entrepreneurship Forum. That’s, that’s what the word on the street is. But, but, uh, I still think there are a few people who may not know what you guys do.
Greg Coticchia (20:21):
We’re working very hard to change that. And, uh, you know, participating with, uh, you and, uh, and your organization is just part of, right? So really all about innovation and product management. Two things that I’ve spent my entire professional career focused on, you know, we worked on getting a really great why statement together in this last year. And, you know, the Simon Sinek, uh, famous TED Box, you know, why do you exist? And, um, we wrapped it around because Sopheon is a 20-year-old company. It has been around, it’s, it’s a publicly held company and in software and services. But our why is really to empower organizations to change the world. What, does that mean? Well, what that means is we’re really helping companies figure out their whole idea to commercialization strategy.
Greg Coticchia (21:25):
And not only the strategy but the execution of it. So in other words, how do you eliminate the risk? And how do you become more predictable and efficient by aligning that strategy and tactic, And so all of our products, all of our services focus on that journey. Traditionally, we’ve been involved with very large customers that are synonymous with innovation. And so we have a broad portfolio of products that are focused on product management, ideation, and project management focused through innovation and the whole process of strategy, execution, and portfolio management. So it’s a fun space, it’s a great space to be in.
Sean Ammirati (22:13):
So with that lens and drawing on your history of doing this, I think part of what, I find interesting is that as companies get clearer on their why, right? And how they wanna innovate and where they have the right way to it. And some of these fundamental questions that I think your tools help them answer, It leads to probably a crisper view on this buy, build, partner acquire conversations. But the partnership is, is certainly part of that, you know, across this, this build versus buy and then again on this partner versus acquire tension. So, so as you worked with companies to think about this, how, how do you, what are sort of the best practices you tell them as they think about a partnership as part of their overall innovation strategy?
Greg Coticchia (22:58):
Well, I, you know, I did, I did it here at Sopheon and it’s the same thing we would tell you. It’s kinda interesting cause we’re, we’re an innovation management company, but we have our own processes. In our portfolio itself, two of our new products we got through acquisition and we actually replaced products that we had ourselves that we were building. It just didn’t make sense for us to continue to invest in them. And it was smarter to go out and acquire. Similarly, we would say the same thing to any of our customers, you have to look at the whole portfolio and figure out where those resources are.
Greg Coticchia (23:41):
You’re gonna place those bets and where you’re going be most efficient and successful. And not all those bets in that portfolio as you want to go to the marketplace are gonna come from your own organization. You’ve gotta figure out a way that, okay, I wanna reduce the friction, eliminate sales time, get more customers, be more efficient. And the best way to do that is to partner with somebody. Maybe it’s an adjacent marketplace that you don’t feel is, you know, core to your strategy, but important to your customers that fit in the ecosystem, okay? Don’t ignore how you partner, you can partner with somebody and see how that works out. Similarly, it may be something that is core, but you just don’t have the resources or prioritization to get to it in the next year, two years, or three years. Okay? Find that partner in your marketplace because that’s gonna be the differentiated value that is going to be really important value for your customer to buy your existing products and services. So we look at the same way our tools, our services instruct, and help our customers do the exact same thing. That portfolio of products is very complex and you are not gonna lift that weight all on your own. It just isn’t gonna happen.
Sean Ammirati (24:56):
Yeah. And I think, I mean I think that the keyword in there, I mean, there’s a lot of gold in that answer, Greg, but I think the keyword in there is portfolio too, right? I think way too many people get myopically focused on, you know, one of their, oh well this is my cash cow, I’m just gonna ride this out. And, and the correct approach to this is to look at it as a portfolio of solutions and to think about it as a portfolio of different engagements with these other things. So you may make a small bet on starting to build some stuff out, really understand the level of effort there, partner with a couple of different startups that may have adjacent solutions there, get deeper with one of them, make an investment, get even deeper, and buy them. But you’re kind of taking portfolio both across your solutions that, and portfolio across these different approaches that you can, that you can take.
Sean Ammirati (25:43):
And, you know, I often think like maybe we should spend more time teaching statistics to folks and less time teaching calculus to folks. Becuase I think if people really understood stats in a lot of ways, like the world might be a better place, I’ll, I’ll sort of leave the politics part of that aside for a moment and just, but I’ll just say like even in business, I think if we thought a little bit more about probability and statistics of these things, it would, it would help. So I think there’s just a lot of wisdom there. I do wanna get back to finish this though with the other part of which is where we started, and let’s go back to your, to your high growth small startup scaling up. So you’re now a CEO of a public company, which is awesome, but you know, you’ve also been part of a lot of that zero to billion journey as well. And, let’s finish broader than eBillingHub. If you were offering just some general advice for entrepreneurs listening to this today about partnering with large companies. Maybe a couple of pieces of advice you could you leave them with to kind of wrap up this conversation today.
Greg Coticchia (26:40):
Number one, and, and I think eBillingHub example that we talked about earlier is very instructive. Don’t be afraid. Don’t say, oh, you know, they’ll, they’ll never listen to us or we’re too small or we’re not ready, or we don’t have, you know, it takes a long, these are long selling cycles. People, we have to get to know a lot of people. These, and most people you’re gonna wanna partner with that are gonna be impactful to your business. And the other side of that is also don’t be arrogant, right? You know, you have something unique and valuable to offer. These large companies are also very proud and proud of what they have and what they’ve built. So, you know, you know, some people I’ve seen also talk down even so there’s a part where some people are afraid to talk to.
Greg Coticchia (27:27):
Some people are like, well, I’ve got this and you know, we’re gonna beat the world. Don’t be either one of those spectrums, you know, it’s a business, right? You know, an old district manager used to say, don’t forget that in that buying-selling relationship, there’s two stick figures. If in your mind one of the stick figures is smaller than the other, you got it wrong. They’re both of equal size, right? They’re both of, and that makes for the best relationship, right? So that’s what you gotta put yourself in the mindset of is, you know, you are getting something of value, they’re getting some value. How do you work that out? And it may not happen on round one. For instance, Thompson Reuters took over at least a year, at least a year of discussions and lots of, no, we’re not interested, or no I can’t get it done. But we also didn’t give up, right?
Sean Ammirati (29:29):
That’s fantastic, man. That’s a lot of insight for this. I think this is a great way to kick off this series of conversations we’re gonna have around how companies, large companies, and small startups can work together, where the sum really is greater than the part. I appreciate you kicking us off and also obviously everything you do for the community here. So thanks so much, and best of luck in 2023 at Sopheon.