How Advsol CEO Robert Alves grew to $14.3M revenue and 500 customers in 2020.

hello everybody my guest today is bob alves he is the co-founder chairman and ceo of advanced solutions international or asia it's a dynamic entrepreneur he is a dynamic entrepreneurial leader who's grown the company from its beginnings in 1991 to become the leading and largest global supplier worldwide of software to non-profit organizations with offices on three continents more than four thousand clients served he's kept asi in the forefront by consistently making innovative solution-oriented decisions on behalf of his clients bob are you ready to take us to the top i'm ready all right non-profits walk us through what you guys do and are you a pure play sas company well uh we're trying to be we've started 27 years ago as a windows solution so we've been transitioning to a pure place sas over the last four or five years today all of our new sales are subscription you know in the cloud we still have lots of clients that are moving to the cloud okay so if we just to understand like how where you're at in terms of the transition if you look at total revenue over the past 12 months what percent was coming strictly from sas revenue um about 5 million which is about our new sales number you know out of about 60 million okay so okay got it so what is that about a little under 10 9 right and it probably would be worth telling you that the business model that we had starting from the beginning was a subscription model people bought our software as a traditional license but then had to pay a 25 of list price fee so another 25 million is a subscription even for people who are not in a pure place sas structure you said 25 million yeah and these are like sla contracts for on-prem installations or something no they're basically uh uh software update contracts they're licenses they get they get entitled to updates oh i see yep so it's a subscription to an update service got it and you deliver these updates to the cloud if they're on the cloud we do have clients that are in other forms they're in on premise as well so you we do have five or six hundred clients in the cloud and then you know more than a thousand that are on the in the field on premise okay so when you push on-prem updates i mean are you having to send field teams out to to physically and manually the old-fashioned way yeah yeah so you found the company about the year i was born so uh so no no this is just what you do when you started 27 years ago and then you're moving to sas yeah so just focusing on the sas component today and we'll include the on-prem updates you've got maybe you've got about 500 clients that are just playing for cloud solution that makes up 5 million bucks right now in arr on top of that in terms of recurring revenue you've got another call at 20 25 million which are essentially licenses for updates right correct and we jumped right into the numbers but like let's step back for a second what do you offer for non-profits what are you delivering for them it's basically a business software solution to to run the business of a non-profit so it's an erp crm and website solution all in a package okay and you know 500 customers if they make up 5 million bucks in ar that means they're each paying about 800 900 bucks a month for this tool does that sound about right well actually the it might come out neatly that way but the clients are all over the board in terms of sizes and also what they use yeah yeah i'm talking an average yeah do you have a do you have a few amount of customers that make up more than 20 or 30 percent of the revenue or you may need more focus on long tails not really no it's um it's widely dispersed yeah so so in 1991 you found the company um where was your head at that point i mean why get into selling to non-profits uh basically that was the opportunity we we were in the business of delivering solutions to nonprofits prior to starting the company and then windows was emerging so we we built a package the first package for windows um and it took the company really literally in three years all over the world we were an inc 500 company the first five years in business and then we basically have just migrated everybody over the longer term to internet web-based solutions that started even around 2000 and then in the last five or six years we've been you know basically getting people on a shared cloud and you know it's all obviously all internet based and bob help me understand kind of the growth of the your shared cloud business so if it's at 5 million bucks an ar today where was it about a year ago uh well we went back about three or four years ago that was it was zero and um the the five million that i just throw to you is just this year's sale so if you go back there's recurring revenue in there as well so it's probably closer to 10 million over the last five years and i'm just talking i'm just i'm just talking about monthly recurring revenue that is that is pure play sas if you're currently at a 5 million run rate that means about 400 or 415 grand a month is what you're doing on the cloud product is that accurate yeah that sounds right okay and i'm just curious so if you're at four kind of ten in thousand today a month where were you a year ago just for the sas platform our sas business is growing about sixty percent okay okay got it very good so you were at maybe uh caught would that be about 300 grand about a year ago something like that that's great and what's the biggest challenge in in flipping someone from an on-prem kind of license model to uh in the cloud kind of pure play sas model well our our solution is has a lot of breadth and depth so people are doing a lot of things and um so it's something that they just don't snap their fingers and do they plan so it's really just getting people to plan and that move it's not that hard it's actually getting easier and easier more more people want the benefits of the cloud they mainly want automatic updates and um it's just getting people to to plan for that and to go through a transition it's it's like moving to a new system those are these are bigger more complicated mission critical systems so they have to move their whole uh employee base and uh it's just a question of getting them to plan it's a you know it's what is help me understand kind of what the team looks like today how many people are on the team we have 375 employees roughly and where is everyone based all over the place we've got three offices in the u.s austin philadelphia and washington dc been lost in toronto london and melvin australia okay so 375 folks spread out a lot of remote there and of those 375 how many of them are focused on kind of marketing onboarding kind of sales and support functions i'm sorry you broke up what was the sure of the 375 how many are focused on kind of sales and marketing sales and marketing oh it's probably about 100 okay 100 and then what are the rest engineers and support or engineer support back office hr accounting that sort of thing professional we do have some professional services okay and and you know churn is critical in any kind of software business right what is your churn today and how do you make sure to keep it low um well we've had historically uh up 95 percent retention rate go on mainly we've had that historically that's mainly because it's the systems as i said are pervasive they have a lot of breadth and depth it's not easy to move off once they're on so we have a very high retention rate okay so about five percent revenue churn per year um i said i said pro plus 95 so it's probably more like two percent revenue return okay and this year we have a goal to have a positive revenue truck 101 revenue trend which yeah so you factor the whole the whole business together yeah i'm not quite sure what that means uh do you mean net negative revenue churn or do you mean over 100 over 100 retention meaning your expansion revenue makes up any churn revenue it's a complicated formula so it's probably better not to try to do it on this call okay i just mean that um yeah we've we have high retention rates and we are in a position this year where our we actually have a goal for our our trunk to be over a hundred percent okay but you understand that doesn't i don't mean just that i don't mean just losses i mean you know add-ons to clients minus losses yeah bob sorry i'm going to repeat back what you just said you just said your goal is to have over 100 churn that doesn't make any sense negative one percent sure 101 positive number so yeah so so i think what you're saying is you either want net negative churn which is the same as uh over a hundred percent net revenue retention they're both the same that's our goal right yeah got it got it we're close we're like 97 98 something like that last year yeah yeah so what that means is your expansion revenue on a cohort you signed up a year ago almost makes up for all the revenue you lose on the same cohort exactly yeah yeah very cool what's driving uh how do you drive expansion are you selling additional seats or additional product lines or what again it's a complex product so there's lots of add-ons that there are always we do sell extra seats when people move from on-premise to the cloud they pay an up charge uh so all that factors in and it's a good it's a good add-on business do you know in order you mentioned earlier you know customer might pay on average 500 bucks a month for the for the technology do you know what your customer acquisition cost on you know to get a new 500 a month customer uh we i don't have uh i don't have that off the top of my head uh we we do keep track of acquisition costs but it's not it's not here to a 500 a month customer either so well the root of the question answer that question yeah the root of the question is how are you acquiring customers and what are you spending to get them well we basically have a direct sales model with direct sales people and we also have an indirect channel so we have about a hundred business partners that sell sell and service our products and we have roughly 25 sales people around the world for new and existing clients that's how we do it that's great you mentioned before the call you said you have a minority stake that's part of a private equity from already so help me understand kind of how you've built the business from a funding perspective it sounds like you have raised capital how much have you raised to date uh 56 million dollars okay and how much of that was actually going into the company versus secondary uh we the only i'd say about 14 million did not go in the company okay is that what you meant when you is was that all from the private equity firm yes okay and they were essentially paying out early stakeholders early founders 14 million went to shareholders and the rest of stadium also helped with an acquisition so oh okay so tell me about that what companies you acquire and uh and is it panning out how you thought it would yes the company is called issi they focus on unions which is a form of membership nonprofit and um it has worked out very well for us that's great are you guys casual positive today yes we are oh that's great great space to be so you know you add another 20 million bucks in in a in annual revenue and you're going to be looking at okay do we go public or not right well maybe maybe do you have any interest in running a public company probably not yeah not a lot of fun right all right bob let's wrap up here with the famous five number one what's your favorite business book [Music] famous business book is good to great by james collins jim collins number two is there a ceo you're following or studying [Music] uh not really i mean i follow a lot of ceos but not not not not that i'm using anybody as a mentor or anything like that all right number three what's your favorite online tool for building your company favorite online tool for building the company bob what's the tool that you use every day i use a tool for um business management which is a balanced scorecard tool uh that's my favorite tool so what's the name of the tool uh it's it's called the balance score card okay uh number four how many hours of sleep to get every night [Music] four or five bob that's not healthy man why don't you sleep i i like to stay up late well then you you have to sleep in a little bit otherwise you die you don't get enough sleep yeah i can't stay on too much i probably sleep six hours that's fine all right and what's your situation married single kids married with children how many kiddos two girls two grandchildren also oh well congratulations how old are you 61 61 last question what do you wish your 20 year old self knew what do i wish i knew when i was 20 is that what you're saying probably that i was going to work all these years and i should have taken more time before i got too serious with working you mean to take more time off yeah i should have waited before but i started my first company at 22. i should have waited a few years guys enjoy life early on again founder of advanced solutions international really serving non-profits currently they've got over 500 customers that are pure place sas customers they make about five million bucks of total of the company's total revenue of which is about 60 million dollars so a lot of it's coming from old kind of on-prem software and kind of sla agreements update license agreements founded in 1991. uh the sas component is growing about 60 year-over-year so 300 grand a month about a year ago again now 5 million bucks in terms of ar cash flow positive about 56 million raised all that money going into the company about 42 million except 14 million uh going to into secondary uh you know early founders early shareholders et cetera early investors uh early on they've got about 375 people across many different locations so remote almost to 101 net revenue retention annually that is their goal in the near future bob thanks for taking us to the top thank you