As the term “unicorn” begins to lose its lustre, a new term for scaling businesses has gained in popularity: the centaur. While still a rarified creature of myth, it’s a more tangible achievement for startups than unicorn status, referring to a company with $100 million in annual recurring revenue (ARR).
“It’s cool to build on other people’s dreams… but it’s cooler to build your own products.”
GSoft is one such centaur, hitting $100 million ARR in 2021 and on track to grow that revenue base in 2022, with plans to hire over 200 new employees across Canada this year.
But hitting this rare startup milestone required making a lot of painful and difficult decisions. Speaking with BetaKit, Simon De Baene, co-founder and CEO of GSoft, explained the decisions that helped the company evolve from zero to $100 million ARR.
From $0 to $10M: no overnight successes
GSoft began as a software development services company in 2006 between De Baene and a couple of friends in the Montréal area. De Baene said he enjoyed the work and that it gave them the confidence (and cash) they needed to continue growing the business. However, the team’s vision was not about building for others, but building for themselves.
“It’s cool to build on other people’s dreams… but it’s cooler to build your own products,” said De Baene.
Leveraging profit from GSoft’s services business, De Baene and his team launched ShareGate in 2009, a software product that helped companies get on the cloud through Microsoft SharePoint. GSoft had frequently worked with SharePoint as part of its coding services business helping clients leverage the cloud.
The team thought ShareGate would be an instant success but it was actually a total flop. In 2011, after two years on the shelf with fewer than 10 licenses sold, De Baene said the team completely rebuilt it from the ground up following intense customer feedback. The new iteration sold 10 licenses in its first year.
It ultimately took until 2013—four years from the initial launch—for ShareGate to break even. All the while, the services business acted as the team’s safety net, with profits being reinvested to keep the proverbial (and literal) lights on while GSoft worked on ShareGate.
From $10M to $50M: kill your darlings
As soon as ShareGate broke even, the company launched its next product: Officevibe, an employee experience platform, which did fairly well from launch. De Baene added that ShareGate also began to “really take off” in 2015 as conversations around cloud computing exploded.
Both platforms targeted mid-market customers with core features and little fluff, enabling GSoft to sell them at far lower price points. De Baene said that GSoft charged around $2,000 annually for its software while enterprise versions from competitors went for multi-six figures. This drastic difference in price helped GSoft gain significant market share quickly.
On the heels of this software success, De Baene and his co-founders began to question the services arm of the business. It had been the company’s start and lifeline during the early days, but ShareGate and Officevibe had grown to 90 percent of the company’s revenues. The CEO also noted that services are an entirely different business model from technology products, and was starting to become a distraction. While De Baene enjoyed running a services business, he realized it was simply not scalable—billable hours could only grow so far: at its peak, services accounted for only $7 million of GSoft’s $50 million in revenue.
Ultimately, the team made the decision to close its services business in 2017, albeit with incredible gratitude for what it had enabled for the company.
“Services financed ShareGate, ShareGate financed Officevibe,” said De Baene. “And it’s because of that that we don’t have any debt right now. We never got any external financing or anything like that.”
From $50M to $100M: build a plan
In 2017, GSoft was riding a wave of success: cloud computing was exploding and ShareGate grew along with it. Further, employee experience was a hotly-discussed topic and Officevibe gained steam from the conversation.
De Baene and his co-founders were also in an enviable position—they owned 100 percent of the company, were profitable, and had significant growth potential. But they wanted more. To get there, De Baene realized the company needed to get its house in order. Up until that point, product development and most business operations were the result of intuition and passion. It worked well for GSoft, but De Baene knew it wouldn’t work beyond two products and $50 million in revenue.
“The biggest challenge for us in the last five years was to professionalize a little bit more how we run the company,” said De Baene.
In particular, De Baene wanted to move the company beyond what he called the “in-between” phase. At the start, GSoft could be scrappy and rebellious, doing anything to make it work. On the other side of the spectrum were more mature companies operating on process and tradition. But being stuck in between can lead to confusion. The biggest changes that De Baene and the team made were to create plans and structured decision-making frameworks so people could run through a process to make a decision against the overall strategy.
When the company was smaller, De Baene feared that too much structure would crush creativity, innovation, and risk-taking. But he found the exact opposite to be true as the company scaled.
“We have a plan, we have a strategy, we’re going there,” said De Baene. “We have a hiring plan. We have a budget. And I think that having those tools now and using those tools is really helping people at making better decisions, taking more risk.”
From $100M and beyond: align to your strengths
In 2021, GSoft launched Softstart, a virtual onboarding platform for remote employees in response to the COVID-19 pandemic and how it changed the way companies onboard employees. GSoft also joined the centaur club in 2021, hitting $100 million ARR with its three products.
De Baene laid the groundwork for this success in 2020 when he refocused his responsibilities and delegated the rest. As CEO, De Baene took on a highly operational role, running most day-to-day operations for much of the company’s life. However, this was not his strength nor his passion, so the company hired Martin Gourdeau as President & General Manager. This new hire left De Baene to focus on what he does best: high-level strategy and running GSoft Labs, the organization’s hub for new product development.
“Our mission is to build the next products of the company,” said De Baene. “So it’s really putting myself where I think I used to be, back in the day, and where my strengths are. And so I’m building the future while Martin is making sure that the current products are strong.”
Now that the company is 16 years old, De Baene has realized a lot more about what business he’s truly in. The company has two “employee experience” products (Officevibe and Softstart) plus one cloud platform (ShareGate), all of which are doing well. De Baene said people often think that ShareGate is a legacy product that the company doesn’t want to cut. But in reality, De Baene sees ShareGate fitting perfectly into what he calls “work experience,” which is not just HR and compliance, but how an employee actually gets their job done.
De Baene believes in building products across this broader spectrum to help all facets of an employee’s work experience. This vision is what De Baene hopes will keep GSoft alive, profitable, and growing for decades to come.
“We’re serious about building a company that will last a few more decades,” said De Baene.
Learn more about GSoft and their products.
Photo courtesy of GSoft.