As a government contractor that provided software development services to the likes of the Department of Defense, Jere Simpson had a pretty safe gig. The federal government’s typical time-and-materials contracts meant that as long as he paid his developers less than the DoD’s hourly rate, his company, KITEWIRE, made an all but guaranteed profit. But a couple of things about that setup bugged Jere. First, he didn’t like paying talented developers less than what he felt they deserved. And second, that fixed profit margin meant that KITEWIRE’s profit would scale along with its revenues on a more or less straight line.
Jere wanted to turn that straight-line growth margin into the kind of exponential growth curve that makes entrepreneurs’ hearts beat faster. So he made a deal with the FBI back in 2017: KITEWIRE would take a fixed fee to develop cloud-based software that made the latest smartphones secure enough for the agency. And KITEWIRE would own the rights to sell the software to other customers. Because KITEWIRE’s new product was software-as-a-service (SaaS), he could sell 1 million copies of it for pennies more than it cost to sell 1,000 copies. The result? Bigger profits, bigger sales—and a $1 billion payday for Jere when he sold the company in 2021.
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ABOUT THE AUTHOR
Lewis Schiff is the Chairman of the Board of Experts for Birthing of Giants and the Executive Director for Moonshots & Moneymakers. He is the author of several books on success and a columnist for Forbes and Worth Magazines.