How Agiloft CEO Colin Earl grew Agiloft to $71.4M revenue and 1.5K customers in 2024.

hey folks my guest today is colin earl he's a software industry veteran with 25 years of experience as a developer product manager and cio he worked at ibm general electric and three startups before founding agiloft it's they're a leader in contract life cycle management and they've been featured many times in the gartner magic quadrant conn are you ready to take us to the top sure so you first have to tell people what does that mean what does contract life cycle management mean it just refers to the creation and management of contracts typically contracts between b2b organizations and to kind of set the stage for this negotiating and agreeing upon one of these contracts can well cost well in excess of a hundred thousand dollars in attorney fees so it's it's not a small issue of course the entirety of business is focused around contracts and those define the relationships between between the companies now this is fun for me colin because the last time you came on was back in 2017 so you're one of my first interviews we're now almost 3 000 interviews in the world has changed significantly since when we last spoke so let's get through the updated story here what kinds of customers are paying you for your contract lifecycle management software organizations from the very largest enterprises down to a few smb companies there's a list of customers at our website but you know includes the likes of cdw chevron um right down to startups so colin you're going to hate this as an engineer but if i forced you if i forced you into an average what would you do the average customer is paying you per month uh we don't disclose that information uh but it is it's like let's say it's significant uh ranges from a million plus at the high end down to a few thousand at the low end so someone can get started on you guys for as little as you know a thousand two thousand dollars a month yeah and for someone that's paying one thing i want to understand is what's the difference between someone paying you two grand a month versus someone paying 100 grand a month what are you upselling against is it number of contracts number of seats something else it's primarily the number of seats there's also different versions of the software for example the higher end customers will typically use the api they may be using 24x7 support services etc are those the main two though it's support services and api frequency support services api frequency and of course the number of users yep yep now that all makes sense okay great and now this is a this is what you call sort of the slow growth story but still a great story you know this is something where you went and raised a bunch of capital and exploded overnight you launched this i believe in 1991 correct that's right yeah so so been going and pretty capital efficient i think how much have you raised to date we had a round of funding from ftv uh about a year ago until then we had no funding at all had grown purely through brute staffing and actually achieved number one ranking in the gartner magic quadrant at least in the enterprise critical enterprise capabilities report without having a penny of funding purely through bootstrapping now how many customers are you serving today i think in 2017 you said you're working without a thousand yeah um then the number is that a partial listing is available at our website there's about 500 companies listed at the site uh a number of organizations ask that we don't disclose their names or logos i'm not asking i'm not asking you to disclose the list of your customers i'm just trying to understand number of customers right this signifies if you're moving up market or moving down market based off the number at the top of your funnel so how many total customers are paying at least a dollar um but i won't answer that directly but i will say that growth over the past year in terms of new sales has been more than 50 percent um and the prior year was about 40 percent okay now when you say year over year 50 growth in new sales is do you consider up selling a current customer a new sale yeah um so it's actually it's more growth in revenue i should say yeah i got it so you you may not be adding a bunch of new customers but if you're expanding wallet share across the current base you can still get great revenue growth yeah um and of course we are adding a lot of new logos but we're also getting a lot of demand from the existing customer base i mean are is the general fees you know when hubspot went public they made a very intentional thing to say guys listen to the analysts our average rp is going to decrease we're going to open top of funnel we want a wider net we'll drive rpo expansion over time it's a very intentional decision what how are you guys thinking about customer growth over time are you happy with just maximum 2000 customers and driving wallet share and rpoos up or will you ever really open top of funnel and be have a self-service you know 100 a month tool we would we don't anticipate having a hundred dollar self-service tool and the reason for this is that angelaft was really designed to meet the needs of sizable enterprises organizations with complex requirements complex workflows demanding loads etc and that level of sophistication is necessitates a certain level of sophistication in the product itself um it just isn't a great fit for the extreme low end that makes sense what does the sales motion then look like today do you have a bunch of account executives calling into new accounts or you mainly have more heavy on csm customer success reps that are just driving expansion in the current base it's most it's not so much uh sales people calling into new accounts but newer new potential clients coming to us registering at the website and then getting a follow-up call from a product specialist or a sales specialist so how many people total are on the team today uh we we don't just disclose those numbers but as you can see from the linkedin profile in excess of 200. okay got it uh so over 200 and how many of those folks would you consider uh engineering in-house engineers about a quarter okay so pretty pretty heavy then at least 50 there are engineers and then do you are there any like functions you've decided to outsource because you feel like it was more effective for the business not so much functions means the number of services that we outsource yeah we don't run our own mail server for example we use the hosted version of microsoft exchange um we use aws for hosting abroad uh we offer hosting on aws in virginia as well yeah so whenever you can use and this is i think a general rule when there's a commoditized product out there that's best of breed and backed by you know significant organization like amazon or microsoft you're almost always better using that than than developing your own yep going back colin to the back straight it's rare you see a founder stay committed for almost 30 years so a pause to you uh to one to one startup here but do you remember can you take us back do you remember the year you passed a million dollar run rate yeah what year was that it was back in 80 i think it was 89. oh so you didn't know it was sorry it was not 89 2000 2001 it was it was quite a while um and the reason for this is that if you bootstrap an organization you have to develop some working capital and we developed that by providing consultancy services we then use that money to fund development of our first product and then use the money from that product to fund development of the agile off suite today so it takes a while um and if i had to do it again maybe i'd raise capital at the beginning now are you the sole founder or how many founders are there i'm the sole founder you are the sole founder okay so you kept 100 equity all the way up through the beginning of i guess 2019 2020. oh no um you know the equity was shared with the employees and you know i think it's part of the agile off culture that every employee gets some piece of equity and you know when we had the investment from fdv millions of dollars went to existing employers as well as of course a fair chunk to myself yep before we get to the ftb stuff because i do that was obviously a big decision you made in the life cycle of the business um there's a lot of bootstrap founders that listen to this show and one of the things they struggle with is when to set up that employee stock option pool or should they just stick with dividends right and and use free cash at the end of the year to incentivize them how did you make that decision when to set up and incentivize employees with equity pretty pretty much right from the beginning um yeah we wanted the one of the core tenets of agiloft is to align the self-interest of the company the employees and the customers and one of the ways that you align the self-interest of the company and the employers is by giving them a piece of it and so what was there again there's people listening here they want to learn from you right what percent did you decide on day one to reserve for you know employee option pool around about ten percent and and looking back would you do the same thing again where did you make it bigger smaller i think we'd do the same thing again okay got it so then over time really all the way up you know 20 30 years later you basically you know you own called 80 to 90 percent you use the option pool to incentivize key employees for another 10 percent and that was until ftp was really the first we'll call it outsider on your cap table then is that right well the the...