How 15Five CEO David Hassell grew 15Five to $99M revenue and 3.5K customers in 2023.

hello everyone my guest today is David Hasselhoff preneur on the co-founder and CEO of a company called 15-5 his fraida entrepreneurship began nearly 20 years ago co-founding three companies in ad tech kitesurfing adventure travel and leadership coaching before starting 15-5 where he sees the opportunity to help organizations and everyone in them reach their highest potential it was formerly Sir a formerly served as the president of the San Francisco chapter of the EO organization or entrepreneur organization and was later named by Forbes the most connected man you don't know in Silicon Valley David are you ready to take it to the top I am alright so you're doing a Oh when you just you just got to you said I gotta get back in the game I gotta start my own thing let me jump in with 15-5 huh exactly alright tell us what the what's the company do and how do you make money as if your place ass so we're SAS for assess we charge in a per seats and subscription basis and we build software that helps leaders and managers be great managers and leaders help bring out the best in their team it had so how does that work is it a feedback loop kind of thing or how's it work it is a feedback loop kind of thing that the core of 15-5 and the reason it's called 15-5 is the basic practice employees spend fifteen minutes a week writing a report that takes their manager no more than five minutes to read and answering key questions like how are they feeling where are they what are they what are their challenges what other successes they give high-fives to each other pure appreciation all that rolls up into quarterly performance reviews okay and so my obvious question to you is Pino sales you know CMOS have our heads of sales have a tough time getting there you know Account Executives to use Salesforce right for data entry how do they convince you will actually use this thing on it on a weekly basis you know and it's actually pretty popular sales teams it's one of these things that once people start to use it they see the value for themselves they see they have access to their leader in a way that they didn't have otherwise we're we're asynchronously they can be getting feedback on their challenges that can be looping in other people from their team they can have conversations the most important their issues get surfaced to leadership in the company without having necessarily go through that VP of Sales I see and so things start to happen organization wide and what's your revenue model is it SAS company it is a SAS company yeah per seat subscription so we had a hundred people you pay per person per month and on average what does somebody pay for a seat anywhere between seven and fourteen bucks a month okay so I assume you're kind of high volume but low ARPU kind of business model actually with two business models we have an inbound self-service that is that and then we have a sales driven model so that you know the RP there is probably 10x to self-service so as you know large accounts with multiple monthly thousand multiple thousands of employees that are sales driven and then small teams say you know three to 100 people that's more self-service is the effective though per seat cost even on the enterprise deals still between seven and fourteen bucks or is our big volume this job or it's good right they're tense we do do some discounting it depends on which version of the software people people go with yeah and put all this on a timeline for me when was launch date we launched the product in March of 2012 and by June we'd been picked up in ink magazine and phenomenal phenomenal launch they wrote about us we've got our first hundred customers right out of the gate and so we've been in the market about was it six and a half years okay and what have you scaled to today in terms of total customers we've got a little over 1500 customers the companies really had a big inflection point lately we were you know we were twenty people at the beginning of last year we were 50 people last month will be 65 next month and you know 120 but it's time next year and so I mean if you raise capital or drive some of this these hiring sprayers are all funded by revenue currently its funded by revenue yeah okay and get so you're bootstrap today yeah we're not bootstrapped we could relative to our competition we were a very small amount of capital raised about 3.7 million to date okay we have you know some some of our you know can ahead take competitors are raised between forty and a hundred million dollars and who are some of those competitors who do you see yourself competing with I see the the three most three companies we bump into most often or a come to caliber flag dude another company called lattice and a third called better works yep yep very good and and help me understand what you've scaled to today if you can in terms of like ARR or even a range is fine [Music] yeah I would say that I can't disclose that sorry okay what else okay give however big range you want to give to stay as vague as you want I mean generally speaking yeah so I mean we're you know we're you know I would say near eight figures okay good so so you know getting close to approaching that 10 million ere our mark right there okay is it an aggressive goal for you to say that you're looking at you know hit that by the end of this year that's a pretty comfortable goal no it's it's we're moving very very quickly okay okay very good and and so you've obviously been able to hire from that kind of revenue walk me through it's driven most of the growth and maybe let's just actually do this from your team size first so the team you said today I believe is like 55 60 people 50 people 50 50 people and break that down for me so how many of those are inside sales working Enterprise deals so we've probably got sales team now is approaching 15 people in five yeah that's yeah but that's you know we've probably got six six the county executives we've got STRs we've got you know now we have a chief revenue officer we've rolled customer success and signals together because a large part of our business has to do with acquiring the customers either through a self-service or sales driven approach and then we have a land expand model that goes of course yeah that makes a lot of sense just for the landing right of maybe it's just even one seven dollar account at you know uber right or something like that well what does that costing you to acquire that again just that one landed that one landed account I think right now our CAC tell TV anyway which you know would be a good measure of that is probably have a five or six to one okay so without going to specific costs you know the you know it's obviously very profitable on that front a lot of that comes in through a combination of inbound self-service the expansion deals I talked about and then some outbound as well let me ask that a little bit differently how aggressive are you being in terms of your patience to recover CAC I mean are you happy to wait 12 months six months 24 months I would say today we're below 12 months oh it's great yeah we've been we've been extraordinarily capital efficient I would say that a lot of companies or building SAS companies will you know will kind of front load their hiring and then make up the you know make up cost on the and you know we've hired in arrears so you know as the business is scaled we hired we hired more people this is a scale to hire more people we've maintained cashflow positivity for for quite a while so whether we continue to do that is a question what I think I think it probably makes sense to to raise additional capital in the near term yep we'll talk more about that later but let's keep going on the economics here so you know anytime you're talking about a price point that's several hundred bucks per month even per seat churn is obviously an issue you got to get the accounts to expand their seats you got to get retention expansion activation all that jazz what is your turnout today it varies so it varies based on the segment like I said you know we have one product but we're servicing to two cohorts of customers right so you've got the the inbound self-service those folks tend to turn somewhere in the in the twos percentage-wise and then you've got the folks who are you know kind of sales leads a 100 account under employees a to say 3,000 those tend to churn well well below 1% yep and just to be clear scent of your exhibit 2% number you're giving me and yourself served models I'm not 2% logo turn per month right right it's a logo turner revenue churn logo churn okay love every term we've always been or at least net Mr Archer McCoy's been strongly negative yeah we have no right I was gonna say you have it sounds like you do have an expansion path you have axes to drive these accounts into larger ones are you at are you above a hundred percent in terms of net revenue retention annually today yeah hundred like you know 120 percent hundred thirty percent and and where is most most the expansion coming from besides just adding additional seats it's primarily additional seats okay it's primarily additional seats going into different departments we tend to work with growth or growth you know growing organizations who are adding employees we and and also there's you know other expansion opportunities when we sell into a particular department and then we close another department and then we go company-wide those are you know kind of obviously larger expansion opportunities and and how have you let's just focus on the free self serve model first I guess that probably feeds your your...