[Editor’s Note: Founder Forum, a weekly interview with a startup founder in Maine, is sponsored by the Maine Technology Institute. Read more about MSI’s sponsored-content strategy here.]

Leo Corcoran, founder of ClaimVantage

Leo Corcoran founded his first company when he was in his mid 40s, thinking to himself that if he didn’t do it then, he never would. That was in 2006.

Today, that company, Portland-based ClaimVantage, employs 35 people and posted $6 million in revenue in 2016 selling cloud-based software for the insurance industry. But it wasn’t always clear it would be a success story. After the original leap of faith, Corcoran had some early ups and downs—a fallout with a co-founder, rebuilding its product from the ground up, a need to rejigger its sales strategy. He was eventually able to gain some traction, though, as normally risk-averse insurance companies began to trust the cloud and the Affordable Care Act created changes in the insurance landscape that prompted more customer interest.

Maine Startups Insider asked Corcoran, who was born in Ireland and is turning 60 this year, to reflect on his entrepreneurial journey building ClaimVantage. In the interview, Leo discusses his early mistakes, why he’s avoided VC money, and why he doesn’t think Trump will be able to get rid of Obamacare. This interview has been edited for clarity and length.

Maine Startups Insider: What do you consider to be your first entrepreneurial experience?

Leo Corcoran: I’m an Irish guy and I’ve been working in the states for 20 years and living in Portland for about 15 of that. I got into the insurance software business 20 years ago. I took two companies from Ireland into the U.S. The first was a company called AllFinanz, they built automated underwriting systems, and the second was a company called FINEOS, who is now my biggest competitor. I took them into the states and got them into the claims business. They were doing other insurance software products and in the end I decided I had my own thoughts on how it should be done. They took the big-system approach and I wanted something a bit leaner and something that was a core product and something that could be implemented quickly and at a relatively low price.

Did you always know you wanted to be an entrepreneur or did you stumble into entrepreneurship?

To be honest I always wanted to do something, but I never quite had the idea or confidence. It was just that things came together. I said, ‘Well if I don’t do it now while i’m in my late 40s, I sure as hell am never going to do it.’ It was kind of all duck and no dinner. I’d have to say looking back, 10 years later, in hindsight it was very tough, but it was also enjoyable. I’ve learned a lot about myself. It’s as much a personal journey as it is a journey for the company. You learn a lot about yourself.

Tell me more about your personal journey. What have you learned about yourself in the rollercoaster ride that is being a startup founder?

It can destroy your confidence, but it can also build your confidence. I’m not a business guy. I have a technical background—light on software, more heavy on the technology. But I had to learn business quickly. I learned that at the end of the day building a business is common sense and to trust your gut and to stay very, very, very focused. The key skill that I have is I’m good at building relationships and I’m good at taking a software product and making sure it fits the market and staying very focused on getting it right by talking to people, so you have to integrate the sales, the marketing, the development, all the pieces of delivery.

You said you lacked confidence. When you started ClaimVantage in 2006, did you feel prepared?

Yeah, I had built up a decent amount of money and I thought I had a good idea. I really thought the business was solid. I felt with claims there was a big opportunity to do something different. I looked around at getting some money. I got some money in Ireland, I got money in Maine, and I put in money myself. So I leveraged all the soft money I could get my hands on.

The biggest problem I had was I had a non-compete with FINEOS. It was only six months, but I was basically going into competition with them, so I didn’t have any customers and I didn’t have a product. I spent $1.2 million before I got to my first invoice. So it certainly backs up what everyone will tell you: That you have to have twice as much money as you think, and twice as much time to make it happen. And that was certainly the case with me.

How long did it take you to get that first invoice?

It took 18 months. It was a long time.

What challenges did you face in getting started?

Compromising on who you hire because of money was a problem. Don’t compromise on people you hire. If you can only afford to hire one good one, hire one good one, don’t hire two bad ones, because it’ll only cause you problems. I think getting the right people is a challenge, but when you don’t have the money you compromise. You can make up for it with stock, though.

So, if a founder doesn’t have a lot of money at the outset, you think sweetening the pot by providing equity to new employees is the right strategy?

Oh yeah. Everyone in the company gets a minimum of 50,000 shares after three to six months if they’ve made it through the initial period. The employees own 20 percent of the business. I don’t need all the stock myself and I don’t have any VCs in the business.

So you own 80 percent of the business?

About 70 percent. There’s some other stock out there, as well.

Any other challenges you’ve faced?

Cash flow is always an issue. If you have the right couple people, everything will fall into place. And then having a very focused plan and don’t deviate. A lot of people, when they get going, they’ll be doing one thing and because it’s not working the way they think it should work—and it never does—they jump around a bit. And I think that’s a real problem because then you dilute what you have.

But I knew the business well. I wasn’t going in blind. I’d been working in the business for 10 years. So I knew there was an opportunity there. The other thing was I thought I’d get my first piece of business from someone I knew, and I knew a lot of people in the industry. But most of these people were very risk averse and when you’re risk adverse, you’re never going to take a chance. Instead, you need to look for those early adopters, somebody who wants to do something different or wants to have control over you. My first two customers were people who wanted to do something different in one case, and one wanted to control me in the other case. But that’s ok and I’m still very good friends with both of them. They were risk takers, they were early adopters. They’ve been customers for 10 or 11 years.

Do you find you’re established enough now that you’re not considered a risk to potential customers?

Well, even with a $6 million business they’ll still do a risk assessment. But they’ll do business with you now because they see you’re doing business with their competitors. That’s the best way to get them to change their mind; if you get one or two of their big competitors, then they think, ‘jeez, we got to do something here.’ We’re fairly innovative and we’re always out there pushing. That’s what I do. I travel all the time and talk to customers, new customers, prospects, anyone who will talk to me.

You still do a lot of the sales pitches yourself?

I don’t do them all. I was here supporting one of my sales guys today. I’m trying to step back a bit. But I’m certainly out there looking for new markets. That’s what I like to do. I love trying to figure out new markets. How we change our core product to fit Australia? How do we get into Japan? What are we doing to get into places like Hong Kong, South Africa, U.K.? I have part-time sales people in all these places. That’s the piece I like; figuring out what are the challenges. Every market is slightly different, although it’s all insurance. It’s like starting out. I have to figure out what those challenges are, how do we address them in the product, and go from there.

You opted for a software-as-a-service revenue model where your customers are paying a monthly fee to use the cloud-based software, correct?

Yes. We reinvented ourselves in 2009/2010 when I realized I had built something like FINEOS, my old company. That’s when my partner and I fell out. We had three customers so I basically fired him and bought back most of his stock, though he still has a stake in the company. And then we moved to the cloud, Salesforce’s Force.com. We rebuilt everything as a core product. That was another huge risk, but I already had some business that would run out for another year and a half, so I fired half the team, the world was falling apart, and, again, stayed focused, rebuilt, and learned some lessons. We were back in the market in less than 12 months. We were doing about a million in revenue at that stage, we’d already dropped down from $2 million. I got a second grant from MTI, much harder than the first, and got some more money from the Irish government and just plowed it into R&D and, again, we got some early adopter customers. By 2012 we got our first big customer, Standard Insurance in Oregon. And after that things just started to take off. We went to $2 million. Then in 2015 got to $3.4 million, and last year got to $6 million, which is 20 percent more than we planned on.

In our business today, there’s a bit of disruption going on, which is a bit of an oxymoron in the insurance business. But if you look where insurance is going today, the claims department, which was always a backwater, is now part of the customer service delivery model and they need a whole digital transformation to make that happen because they have legacy systems. So that’s one big thing that’s happening. And the other thing is, because we’re on the Salesforce platform, we leverage everything around that. They’re very big in insurance today, so it plays very well with customers who are on that platform. The cloud has become mainstream. When we got into it, it was very much seen as risky. But now these companies are adopting it very quickly, which is great.

You never took money from outside investors. How did you manage to cash flow the growth of you company?

I was able to just keep it going. I took all the soft money I could find and outsourced everything I could. I only hired people that would have an immediate effect on the business and could earn me money. I still don’t have a CFO; I have a part-time CFO. I have a part-time lawyer. I could hire all those positions now, but I don’t want to because that’s not the business I’m in. The business I’m in is building software and looking out for the customer.

I’m sure a lot of startup founders in your position would have been tempted to take VC money by the dollar signs the VCs could provide. Did you ever find yourself tempted to take VC and have to use self restraint to not go that route? Did you have that internal dialogue?

I had it many times. But in the end, unless i I didn’t want to do it. I could do it now, but I managed to get $2.2 million last year from a fund in Ireland that’s basically a four-year loan with a 15 percent dividend. That’s easy money and that helps me to do three things: I can invest in R&D. I have three people fully committed to R&D, which is 25 to 30 percent of our resources, which is a good number. I can hire now ahead of the curve rather than after the event, so being able to put people in place allows us to set ourselves up for scaling. The third thing it allows me to do is invest more in really doing a good job on Asia_Pac. Why would I ignore four billion people?

TheAsia-Pacific region is your next big target?
Yeah. Our base in Australia now gives us something to build on.

What was the thought process around seeking out international growth. Did you worry about spreading yourself too thin or trying to scale too quickly?

The thought process was I would just start doing some of the conferences in these different countries, go down once a year or twice a year, which I did for a couple years. A trip to Australia or a trip to South Africa or U.K. would cost maybe $5,000. But I leveraged connections I had in the U.S. to get introductions in these different markets. It’s all about building up credibility and making changes to the product so they can see how it would work in their market. Eventually, it just started to click. In Australia, we got three deals in a row after gently knocking on doors for five years and today we do about $1 million a year down there.

You said you hit $6 million in revenue last year. What percentage of that is international versus domestic?

This year international will be 20% and 80% in the U.S. And over 50% of the total revenue is recurring. That’s the key and makes the business much more sustainable. (The other 50% of revenue is in implementation fees and services.)

What’s your employee growth been like?

Employee count is 34 or 35, but we’ve doubled in size each year for the last few years. We were standing around 12 for a long time. We’ll get to 40, and possibly 50, this year.

What kind of positions are you hiring for in Portland versus your Dublin office?

In Dublin it’s all developers. In Portland, it’s business analysts, we’re looking for one or two software developers, we have sales and marketing, customer support, and more on the implementation side.

What are your long-term goals for the business?

More than likely an acquisition at some point by a software company. But I really want to do three things. I want to build a global software company that’s in four or five continents. That’s important to me. The second thing is to be able to support that on one core product, and we’re pretty well down the road there. Having a core product across multiple geographies is really important to me. And the third piece is to have a world-class customer service. And that takes time, but we’re getting there. If we achieve those goals then I don’t mind what happens. And I’m an old guy. I’m 60 this year, so I’m running fairly hard for a 60 year old. I was always amazed that the average age of entrepreneurs was more in the mid 40s. I thought it would be a lot younger, but it’s not.

Obviously, the Affordable Care Act must have had implications for your company. How closely are you watching what’s going on in Washington, D.C., with the threatened repeal of the ACA?

I do watched events in Washington very closely. Obamacare provided an opportunity in our business. While health insurance isn’t our business. Our business is more on the life side—life claims, income protection, critical illness. What the ACA did was people started taking bigger deductibles on their health insurance. Then, what they wanted to do is fill that in and get additional protection to actually cover them all, so they started buying voluntary products like critical illness, accident. That kicked off a whole new round of business for companies like Unum and that helped our business as well. So it was disruptive. Insurance companies didn’t see that coming, but they reacted pretty quickly. And they didn’t have the systems to support it, so that gave us an opportunity. The ACA is good for us, and this one… God only knows where this is going. I’m not overly confident about it. It’s impossible to predict where Trump is going because there’s no predicting Trump. I don’t think the ACA is going too far. There’s 20 million more Americans insured today then there were six or seven years ago and you can’t afford to drop them. If he does, God help him in 2018.

Have you had any mentors over the course of your entrepreneurial experience and whether you received any memorable advice about starting a business that has stuck with you?

I have had mentors, and I still have mentors. And I encourage my own managers to have mentors and arrange mentors for people within the company, as well, because you become a bit myopic when you’re always looking inside. I have a mentor in Ireland and I also have another mentor here in the U.S. that I talk to about problems. There are certain things you just want to run by other people to get an objective opinion. So I think advisors are a great idea.

In terms of advice, obviously focus is very important. Never lose your focus. But I think the biggest thing is always have a Plan B. Don’t always rely on Plan A because Plan A can go awry. For example, if somebody would invest a ton of time in just one customer opportunity. You have to have a ton of them. You can’t rely on Plan A; you have to have a Plan B. If I look back, I’ve always tried to have a Plan B and it’s stood the test of time.

Another piece of early advice I got was from my accountant. I told them I knew nothing about accounts and I didn’t plan on learning much about them at this stage. And he said, ‘you worry about the cash flow and I’ll worry about the accounts.’ And not that I have to sweat the cash flow now, but I always watch the cash flow. Cash flow is king. You can get yourself in an awful lot of trouble in a short period of time if you haven’t figure out where your cash is coming from for the next three months.