Last night Salesforce released its report for the 4th quarter and showed that it generated more than 7 billion USD in income. Salesforce was the main inspiration for me when I decided to start Bricknode in 2009.
Salesforce was one of the first companies in the world to offer a cloud-based Software as a Service to businesses and started in 1998. Salesforce began with a CRM application and to offer it they had to build a core cloud application infrastructure. As the years progressed Salesforce started offering the core infrastructure called Force.com. It also expanded into other product areas together with its marketplace offering and promoting their API for others to use and expand upon.
This is extremely similar to what Bricknode is doing, we started with Bricknode Broker for what is called financial intermediaries. These are banks, brokers and FinTechs which distributes financial products and acts as an intermediary between the issuers of these products and the consumers.
When developing Bricknode Broker we too had to create a core, we call this the operating system for finance. The main challenge for Salesforce in 1998 was technology since there were no infrastructure available for offering cloud based software.
For Bricknode the pure technology behind cloud infrastructure has never been the main challenge. Instead, the challenge was to invent how the so-called financial domain objects should be represented in code in a scalable and generic manner as to not “hard-code” stuff and get us into a dead end. Another challenge was regulations, in 2010 both potential customers and regulators told us that it was not possible to have financial applications running in the cloud…how wrong they were.
Many have failed along this journey and not taken the time to create a real granular transaction engine as the base. It took Bricknode between 2009 – 2021 to do this right and test every aspect of our invention with multiple real life customer cases. It took Salesforce about 10 years to build up the core technology and launch into a real core software provider in the cloud for a whole industry.
Just as Salesforce did when they launched Force.com in 2008, Bricknode is now morphing into being a multi-product company based on a strong core system, which customers can use to build their own applications through our API.
Our own research shows that a majority of neobanks are choosing to use a SaaS provider as their core when it comes to offering financial services and we think this trend will continue to expand. The Bricknode core now covers everything from investments and loans to wealth management and you can basically build anything related to finance on top of our operating system.
During the last few years we have been able to build a number of new killer applications within specialised areas like Bricknode Deposits and Bricknode Fund Manager which are scheduled to be released to the market during 2022. On top of this we are also developing an application for mass adoption globally that does not require the user to be a regulated company. It will help every company around the world to organise their finances and automate administrative activities around this including accounting, reporting and keeping up to date with all of their investments and liabilities. This will be a “must-have” addition for companies to connect to their regular accounting systems so stay tuned!
Salesforce, together with many software companies, have seen their share price fall more than 40% since the end of 2021 even though they continue to show unbelievable long-term growth. The scalability of the offerings are governed by how dynamic and generic they are, if the solutions are custom made for each customer then the scalability of future profits does not exist. A while back I wrote my thoughts on how to value a SaaS company which you can read here.
The gross margins for Salesforce are at 75% while the total operating margin is at 3.5%. If the system is built right the total operating margins could eventually go to +50% but that would mean that the company would slow down its investments into future growth and in reality, borrow from itself which Salesforce is not interested in.
For the last 10 years Salesforce has grown its annual revenues by 25 – 35% each year, this is what having a long-term view can do for a company, like the view that Salesforce founder Marc Benioff has had all the time. Salesforce has become a purpose driven company that does good things for the world and is a great inspiration for today’s entrepreneurs!
By focusing on products and helping customers reach their goals my dream is to make Bricknode into a Salesforce for finance. I love building software that I can use myself and with the coming mass market offering from Bricknode we are truly closing the circle of building the network between financial service providers and financial service consumers where we are driving change to a more efficient and user-friendly way of consuming and delivering valuable financial services to companies and individuals.
As I and Co-CEO Erik Hagelin wrote in the last quarterly report, 2022 is when we use our newly acquired body at Bricknode (going from around 20 to 40 staff members) to launch all our new products on top of our great core and establishing ourselves as the premier software, network and infrastructure provider to the financial industry and all its stakeholders, consumers and providers alike.
This is what really motivates me personally to burn the midnight oil and be highly engaged in coding our applications!
Just as Elon Musk is now able to help Ukraine with internet, I hope one day that Bricknode will be a global powerhouse for good and make an impact through technology!