Q&A With Calabrio CEO Tom Goodmanson On The Acquisition By KKR

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Tom Goodmanson, CEO, Calabrio

Minneapolis workforce optimization software company Calabrio was purchased by New York private equity firm KKR for approximately $200m, as reported earlier this week in the Wall Street Journal. We spoke with Calabrio CEO Tom Goodmanson about it.

Franklin Partners

What is the genesis of Calabrio

The genesis goes back to 2006/2007, when Spanklink (now ConvergeOne) spun-out Calabrio as a standalone software company.

Spanlink was a services company and so the board at Spanlink wisely pulled the product apart.

I was employee number one at the split and came with about 40 people and we went all in on a quality management software for call recording, scoring, feedback, etc.  Since then, we’ve added a key analytics component, which helps customers gain further insights.

Over time we had really morphed into a customer engagement software that helped companies grow their bottom line by making sure the right person was in the right seat at the right time.

How many customers had you acquired at time of the sale?

4,000 customers and about 1.5 million desktops, focused on financial services, retail, and government sectors.

How much outside investment capital did Calabrio raise?

At the beginning, we raised money from Split Rock Partners and BlueStream Ventures, $9m combined, back in 2007. From there it was all organic growth, no equity, no debt.

What was your recipe for success over the years?

A couple of things combined…first, a strong focus on our customers; we doubled down on our technology based largely on feedback from our customers.   In the Gartner Magic Quadrant, we started as niche and eventually became a leader alongside some much larger names.

Why did KKR buy Calabrio?

This is an industry that still has a lot of fragmentation. The dual edge thesis here is that that we were the largest company available with our focus and they see us as a platform that can further bring the customer engagement technology space together.

The Journal reported a price of $200m, do you have any comments on that?

We are not disputing what they reported.

What was your annual revenue at the time?

Gartner estimates that, in 2014, our revenue grew by 35%, to $65 million

What will change at Calabrio?

From a base level, nothing will change. 100% of my team will stay and run the new Calabrio. The biggest change will come with the level of capital available through KKR. One prong of growth going forward will be organic, the other inorganic.

What do you mean by inorganic?

horizontal acquisitions and verticals acquisition with an international focus.

Do you have your eyes on any local tech?

As you know we have a great local technology base here, it’s very diverse, but the short answer is nothing local on my radar right now.

So you do intend to stay with the company for the foreseeable future?

No one else will have me.

How many employees do you have and where do you see that headed?

We have 260 today and our road map calls for 300 by the end of the year, which will be a challenge, but its one that we’ve accepted.  We’ll probably need to add 150 next year. From a talent perspective, we’re in buy mode.

How do you plan to achieve your hiring goals?

Our culture, our benefits — like student loan repayment — and the backing we have. We’re not a startup, an established and growing company where people can make a long term career.  Plus our tech is really progressive and fun to work on.

Are we going to hear more about Tom Goodmanson the angel investor going forward?

It tends to happen quietly, but I do have money spread around town. I hope to continue seeing great opportunities that I can get brought into. Our community needs solid businesses and when business becomes solid they need to support others.

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Comments

  • http://twitter.com/casey__allen Casey Allen

    Something that doesn’t get talked about enough is how damn capital efficient almost all successful MN startups that exit are.

    When you look at how little capital most recent MN exits* took it’s quite remarkable. It’s great for the angels, superb for the founders and employees, and generally very good for the VCs depending on the size of their fund.

    We generally do far better at this than the coasts. Which means we don’t need as many unicorns for the outcomes to be big and impactful for all parties involved.

    Tom certainly did a lot with a little.

    *Enstratius $50m off $3.5m raised
    Jobs2Web $110m off $5.5m raised
    NativeX $24.5m off not much raised
    Calabrio $200m off $9m raised

    • http://www.GoVugo.com James Bellefeuille

      I am almost afraid of what would happen to Minnesota if coastal VCs discovered how efficiently Minnesota Entrepreneur’s operate, however as an entrepreneur… it couldn’t hurt.

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