Uniconta, the company behind Erik Damgaard’s “new” financial management system of the same name, has won the 2023 Gazelle Award for the Capital of Denmark.
According to articles in the newspaper, Uniconta has grown 2,338.5% in just four years.
I think the company’s ability to acquire new customers and retain existing ones is more impressive. Uniconta is sold as a monthly subscription, which means that customers can drop out at very short notice.
But they don’t.
Widespread customer satisfaction ensures a steadily (and rapidly) growing turnover and exceptionally high earnings. The recipe for success has several elements, which I will discuss later.
The early start
I put “new” in quotation marks at the beginning of the article because Uniconta’s history goes back further.
While I was working on writing the book “5,460 Miles from Silicon Valley“, Erik Damgaard told me about his activities developing a new financial system to replace Microsoft’s C5, which they (Microsoft) did not want to continue. During our conversations about his time with Damgaard Data, Erik sometimes had to stop by to restart a server or fix a network problem. He would also much rather show me his new system, which at the time was named after a Brazilian state, than talk about the old days 🙂
It was clear that he was back in his element.
With Microsoft’s farewell to C5, he saw a gap in the market, and based on modern cloud technology, he had an architecture in mind for a product that could help small and medium-sized businesses streamline their daily operational tasks and financial management.
“The genius of C5 was that it was customisable,” Erik told me then. “It allowed our resellers to customise it for all kinds of purposes. That customisation attracted new customers and was good business for the resellers.”
Meanwhile, a technological shift had made it possible to deliver software as a service. This was a huge advantage for customers, who no longer had to deal with their own servers and all the technical software that a financial system is based on. Erik had thoroughly familiarised himself with the new technology, and with a previous product, Straticator, he had also gained valuable practical experience.
“Just because the technology has changed doesn’t mean that all companies are now the same and can get by with the same system,” Erik added. “There is still a desire to customise the features to the specific needs of businesses, and my new system must offer that.”
It took some effort to get Erik to talk about the old days. He succeeded (the Damgaard book was published in September 2017), but the many hours of interviews were constantly peppered with demos of new features in the upcoming product and troubleshooting the infrastructure.
Erik was better in the future than in the past.
The Damgaard model all over again
With the new product, he wanted to follow the same sales model that had worked so well for Damgaard Data: resellers.
“Customers still want customisation,” Erik emphasised, “and no one is better at that task than dealers.”
Therefore, the new product also had to be a reseller product.
It was an excellent opportunity to get Erik to tell us when and how he realised that retailers could do more than just resell the products.
“It happened already in the late 1980s,” Erik remembered. “Our first product at Damgaard was Danmax. It was completely standard.”
Danmax hit the market in 1984, when IBM launched the PC, which made IT accessible to small and medium-sized businesses. Brødrene Damgaard’s choice to serve customers via resellers was a bit of a coincidence. But as they were practically queuing up to sell the product, the two brothers, Erik and Preben, quickly realised that this model could scale.
In 1986, Erik launched Concorde Økonomi, which would become the preferred financial system for Danish companies for many years to come.
In the fall of 1987, he started developing Concorde Economy version 4 to meet some of the many requests coming in from customers and dealers. He decided to change the file system so dealers and customers could customise and expand the product. Erik had learned that when he allowed dealers and customers to change something in the system, they adopted it at lightning speed. With the changes to the file system, it was possible to respond more quickly to special requests from existing and new users, and dealers could expand their consulting business by offering to make these changes.
The dealers got a better business when selling products and consulting hours. At the same time, Damgaard Data did not have to take care of all requests for extensions but could settle for developing the most general improvements.
Concorde Økonomi version 4 was the first step towards a paradigm shift for Damgaard Data. The product could be used without any other setup than chart of accounts and standard reports. However, now, customers can also add new data fields and functions to solve tasks that the standard product does not immediately support. In addition to making Concorde more customisable for each customer, dealers used the improved flexibility of version 4 to develop features to serve entirely new customer groups. In other words, the resellers could now serve customers for whom Damgaard Data had no special knowledge and could not develop products.
Concorde XAL, released in April 1991, was the world’s first financial system with built-in development tools. It was designed from the ground up as a dealer product, and over the next ten years, it became the foundation for many dealers’ great success. And thus Damgaard’s.
“I need someone to build the reseller channel for my new product,” Erik Damgaard said, once again looking to the future. “Do you know anyone?”
Experienced people
With the product and business model in place, Erik needed a business developer to execute. He persuaded Per Pedersen to take the baton for this position.
For many years, Per was responsible for sales and marketing activities at Damgaard and is probably the person in Denmark who has the most experience with the partner channel that Uniconta required. It succeeded far beyond expectations, and in just six months, Uniconta, as the product was now called, recruited 100 dealers across the country.
Erik was also aware that the way to many small and medium-sized businesses is through their accountants, and he brought in Jørn Rejndrup to take on this task.
Jørn, Per, and Erik made up the executive management team and were responsible for both the outward sales work and the inward management. Casper Guldbrandsen, who also started at Damgaard Data, was put in charge of marketing. Together, the quartet and the other employees have created impressive results.
The recipe for Gazelle of the year 2023
I have followed the company closely since its beginning, and in February 2020, I joined its board of directors. Now, they have won this year’s Gazelle award in the capital.
I followed the creation, the start, the first years with investments and losses, and then the development into a unique star.
The success is based on a well-known and proven business model, where the individual elements work perfectly together and where the people assigned to execute have relevant knowledge and experience. In this way, Uniconta is also the success of what we call “the grey gold”, resulting from experience and good craftsmanship.
The foundation is a comprehensive product designed to be delivered from the cloud, developed to serve thousands of users, customisable to their individual needs, and delivered through resellers with industry and customer insight. To execute the model, Erik has chosen several highly experienced people who know how it should be done. Based on Microsoft’s decision to discontinue C5, they have pursued a three-pronged marketing strategy with equal emphasis on resellers, customers, and accountants.
Uniconta skilfully and confidently exploited a change in the market to find space for a product that many felt already had enough alternatives. The positioning was well-thought-out and effectively communicated to the three key target groups using proven concepts. Selling financial systems to small and medium-sized businesses requires personal contact, which the entire marketing strategy has supported.
Der er et yndigt land (The title of the Danish national anthem)
I often write that Denmark only represents 0.25% of the world market, so software companies must orient themselves internationally. This is true in most cases, but an area like financial management systems makes an exception. There are three reasons for this.
- Despite its modesty, the Danish market is big enough to support a company that offers software that every business needs. And every company needs a financial management system. Read the book 5,460 Miles from Silicon Valley. You will also learn that Damgaard Data and Navision Software (they merged in 2000) lived off the Danish market for many years before the international activities took off.
- Financial systems for small and medium-sized businesses must adapt to national legislation and market practices. This requires investment and ongoing maintenance before the first customers can go live.
- Entering the market for financial systems for small and medium-sized businesses in a new country requires more than a good product. It requires the right timing when there is already movement in the market. Microsoft’s decision to discontinue C5 created the movement in Denmark. The fact that Erik Damgaard was the architect behind C5 made his Uniconta a credible replacement. Finding a similar movement in another country requires patience.
I am convinced that Uniconta will one day have more customers outside Denmark, but when and how this will happen depends heavily on external factors that need to be monitored.
