Agiloftrevenue & funding

hello everyone my guest today is Colin Earl he's the CEO and founder of agile loft before the company he worked at IBM GE and startups as a developer product manager and CIO his vision was to dramatically boost the agility of business applications by removing the need for manual coding and the company has now become the market leader in no-code enterprise software Colin are you ready to take us to the top mr. Lyon alright market leader in no code enterprise software is a big title quantify that for me how do you know there's a very limited number of applications aren't there that a truly no code word we're leading away we were recently chosen by PC Magazine as providing the world's best contract management software and in the Infotech analysts award said that the angel of service best product was the market champion and best value you give me sense of IQ usage so how many folks do you have it using your suite of tools Wow in terms of companies we have something north of a thousand in terms of users well into the millions 2.5 well between 2.5 and 3 million at this point okay and give me more than backs right here so for people that are not familiar with the company what do you do when what your business models appear SAS yes it's it's pure SAS but we also allow in-house deployments so the vast majority run on our service for some such as the US Air Force and have a highly secure deployment run inside their own firewall on the secure network got it and walk me through some of the backstory here when did you launch the company hello's company back in 91 but the the no code application the agile off product that's a flagship these days was launched seven years ago okay and did you bootstrap the company or me raise capital bootstrap Joanie bootstrap that's great and where are you guys all Base Redwood City Silicon Valley very good my gosh so you've really resisted temptation you're in the lion's den and Eve managed to say bootstrap that's good stuff thank you why strategically did you make that decision the the proposition that we would be taking to VCS that we're going to be developing a product which will take in excess of five years to develop a full no code platform upon which it's possible to build enterprise class products and fight for a VC five years from initial investment to hello world not an IPO but the first product built on the platform is way too long and of course the VCS are calling us now that we've developed it but they tend to have a very short time frame we see enterprise software as being more like a marathon than a sprint and what making decisions based upon where we need to be and where our customers need to be five ten years from now endeavours again you mentioned the US Air Force and some other customers tell us that are actually using you wow that's a that's a pretty broad range calling to be fair that's like a fairly easy I mean that's like a business one-on-one thing right absolutely well let's take a couple of examples and Roche has contracts with hospitals with suppliers and those contracts are not just a paper contract they're living documents they're living documents which reply imply an obligation on the part of the customer to buy a certain quantity of drugs reagents each month and for the supplier Roche to provide service and maintenance and those machines so you know this is a way away from a simple purchase contract it's a living interactive document and back end supply chain management to ensure that all parties meet their obligations that's one example so you're like it just to be clear that's like it's like an enterprise secure version of DocuSign it's an enterprise of your version of a living contract documents just a signature part let's take another example chevron chevron needs to comply with the sarbanes-oxley requirements that in turn requires auditability it requires a mechanism for tracking how chevron how each individual in the company is addressing those requirements again managed throughout aloft take Cal Poly they have hundreds of thousands of students those students need to be provisioned with services they need to be able to make requests they need to be able to manage their assets again like computers they're renting and desks sir exactly computers access for laptops access to online trainings access to security codes to get into their dormitory Carl this seems like you cover so many differents like so many spaces how many people on your team we we don't disclose numbers but I can't say that we have more than 50 and less than 250 employees why do you disclose employee counts out of curiosity it's it's just standard practice for private businesses well I would actually argue with that we've had about 3,000 BB SAS to use on the show and almost everyone shares their employee count but there's a reason you're not doing it I'm curious like is it a competitive thing or you know if you're picking off employees or we don't work we don't want people pick you off employees and we don't well really what we're doing is we're not disclosing financials yeah that's why I'm saying so how does employee count tighter financials well you can you can set you can estimate for example that each employee fully-loaded is going to cost you between a hundred thousand two hundred and two hundred thousand dollars we're profitable if we if we stated were profitable and we have 52 employees you'd be able to put a pretty good range on our revenue if we profitable and we have 220 employees that also puts a pretty clear number on what our revenue is and we just don't disclose that okay so basically basically what you've just told me that you said between 50 and 250 you gave me kind of your assumptions you are using which may or may not be at board of companies around the world but you basically just said I could multiply 50 employees times 100 to 150 all in and then a high range is up 250 employees at 100 with Ulen and say you're doing somewhere between five and twenty five million annual revenue so you've given us a big vague range is that accurate yes yeah and I'll just say what a fair way beyond five million or you know seven digits were into eight digits that's great yeah so you're about so you're between ten and twenty five million that's wonderful yeah really between 10 and 50 but yes 10 and 50 what that's wonderful so tell me more about I mean are you only serving these enterprise folks or do you have kind of men markedness and bees using you as well no actually that that's one of the things I'm proudest about is that we serve the SMB market as well the same code that provides sarbanes-oxley compliance for one of the mods world's largest and most sophisticated company is the same code that's being used by 20 persons farter to manage the distribution of organics lunches to school kids in Marin so yeah it really runs the gamut now that said the majority of our customers are between 250 and 500 phones and employers on at me is a better question on average what's the average customer panyu per month are we talking $1 or million dollars the average customers paying us you know in the order of $1,000 per month okay the average deal size is about $45,000 a year no for the initial implementation plus the first year of service okay got it so you have that kind of a setup that you do do any on-prem stuff or no we occasionally we'll go on Prem to set up but the vast majority we just do over the web okay so you split that split that first your ACB down for me it's 45 grand what percentage that is going to setup versus just paying the 12-month contract all right it depends but typically in the order of $20,000 for the set up maybe $25,000 for the set up and then 10 to $15,000 per year makes a lot of sense I imagine with that kind of setup fee that really enables your customer onboarding team and the rest your team to only focus on real meaningful customers and your churn is probably super low because of that that fee is that accurate and if so what does your annual retention look like uh it is certainly accurate and your retention and it depends upon whether you look at the customer count or the seat count in terms of customers it's about ninety four percent in terms of a logo retention or a revenue retention logo retention in terms of revenue retention it's over a hundred percent because the the existing customers purchase more than enough seats to make up from the Baker the drop-off from the from the customers that we lose yeah so said differently you are very much in the net negative revenue churn range yes yes makes a lot of sense where are you finding these new customers how are you closing new deals that coming to our website they're coming to our website saying we have a need can you provide a solution how do they find your website going through exit well for example if you type contract management software on the first page of Google it'll bring up the PC magazine review of contract management systems and as the editors choice number one in that review a lot of people come to us through that others come through the review sites like kaptara G to craft trust radius and I'm pleased to say that we are the most highly praised in those reviews now these guys their business model is you can pay for placement do you pay kaptara or G to crowd anything I we pay in some categories we're paying for placement in in the list and in other categories were not got it you know I just brought up by the way this PC review yeah you guys are at number one then you have kind of updraft Concord on it contracts eight coop contract works a lot of these other guys so yeah that placement I can easily I can see where that drives you guys a ton of traffic it does yes yeah I'm interesting so are you spending anything oh I guess you are a little bit for categories you're not in but in a given month what is like a total now you're spending on paid acquisition only it varies but typically something the order of 30 to $50,000 a month so not actually fairly small as a percentage of your total revenue yeah yep and are you spending that in any other places besides these review sites let me think no another present okay and when you look at your sales and onboarding team plus you're paid spend in total what are you paying or what are you willing to pay for cap customer acquisition cost what willing to pay in total something in the order of six man months over six months worth of revenue SAS revenue from that customer which is about six grand could you tell me ARPU earlier was a grand yeah yep and and walk me through more the reasoning teach us a lesson there why six men why six months of revenue six months of revenue and shows that were profitable in the first year now the norm in the SAS business incidentally is to be willing to pay up to 12 months of revenue but we have a problem we can't hire people fast enough to address existing customer demand we're growing at over 40% per year and we're based in Silicon Valley in terms of revenue by the way our logos revenue it is simply a nightmare hiring smart qualified people in the valley we don't need programmers we just need people who have attention to detail and natural intelligence war intelligence and even there it's really tough to find the caliber of an individual that we need so we're spend it were deliberately spending less on sale marketing and sales than we could because if we were to spend significantly more we wouldn't be able to meet demand we wouldn't be able to blow the implementation services to get to make those customers live and happy and to be clear if you had a 12-month payback period and you were growing fast adding loads of new customers every month you would run into a cash cow problem since yourself I mean since your you haven't raised money you have to keep that pretty tight well actually we've accumulated several million dollars in in cash so no we would be good on that front got it okay good that's totally fair what do you sue my time value is of one of your customers in the well it is there's a wide range and we have as I say we have customers whose bill value ranges between 20,000 and 1.8 million dollars that's one year contract that's that's one year contract lasts the initial implementation so the lifetime value is typically in the order of half a million to a million dollars well Colin last time I checked that math works if you can put six grand in an ATM and spit out half a million over the first couple years of a customer's life you use an ATM all day long well bear in mind it's not the first couple of years its lifetime value for us is typically in excess of ten years got it and your I mean you look beyond the sample size to do it you launched in 1991 right yeah all right give me some of the back for Europe again sir 1991 you launched do you remember and your first year revenue no but it was a one-man shop at that point and another branch oh yeah lucky less less than a hundred Rand and fast-forward us I'll do every decade here so fast forward to like December 20 2000 you member what your run rate was then I I don't about I'm gonna have to cut you off on that because I simply don't have those numbers but what I what I could what I could do is I could I could if you look at our revenue over the past seven years it's shown a really startling rise we've been we've been increasing revenue at thirty to forty percent per year for the past seven years so you know if you if you were to take a seven digit number excuse me an eight digit number in the area of you know 10 to 50 million and tract from there as you know given 30 to 40% per year you'd be more or less where we were seven years ago got it we're very close to the end of 2017 I assume you throw based off that shirt you're wearing a wildly fun holiday party at the holiday parties what are you guys toasting to do you think you break 30 million in a are like what's a stretch goal but it's still a little uncomfortable we have we have some deals in hand which if was if we're successful in landing them taking them through to completion will represent in excess of 50 million dollars in revenue over whether for three four or five year contracts kind of thing yeah but that's for one individual such deal yeah well so tell me I mean your pipeline is what would I hear you're you saying is you pipelines very very healthy but do you I mean do you think by the end of this year you'll break the kind of magical thirty million dollar like actual closed runway mark I'm not going around so that I'm just keeping my fingers crossed all right Colin good stuff let's wrap up here with the famous five number one what's your favorite business book probably kept crossing the chasm Jeffrey Moore it's a good one number two is there a CEO you're following or studying right now no number three beside and I say no because there are several CEOs that I'm following maybe one that's not a normal like not a mainstream one no they're all mainstream okay there's no like I'm talking like Elon Musk Steve Jobs maybe someone someone might not have heard of before I'm not asking you for your favor by the way I'm asking is for educational purposes from my audience if they want to go learn from someone who's no sorry if they want to go learn from somebody the the one that I recommend above all else is Peter Drucker Peter Drucker Peter Drucker he wrote a number of management books and the beauty of these books is that they're brutal this to the point they're direct that entirely free of fluff and they're actionable there are you know there are other books which inspiring the Tom Peters books for example are inspiring but the folks who've tried to put those books into practice have struggled because that not actionable and they're more to do with getting you pumped up and enthused on the rest of it than in actually executing a business strategy ami Peter Drucker was superb for the latter all right Peter number three are quick answers here cuz we're almost at a time what is besides your on what's your favorite online tool / alright number four how many obviously to get every night seven right that's pretty good in what's your situation married single yeah kiddos very happily married for the past twenty years Wow and how many kids just one just one kid oh okay how old are you callin I'm less than sixty but not that much [Music] fifty nine are in that range less than sixty my net though alright Colin last question take us back 20 or sorry thirty nine years what do you is your twenty year old self new wow that's a good question um first trust in your instincts don't believe you don't believe them when they say it can't be done lastly be humble those especially these days there's so much knowledge out there on the Internet any question can be addressed any of any any any business question that you have can be found through research on the net what it requires though is the willingness to look at that answer look at a range of other answers to that same question and determine based on your circumstances your intuition and your knowledge which is right and nine times out of ten the one that's right is the one that is actionable to the point and lacking in fluff that you know that acknowledges that people are far from perfect and that includes yourself that's a good card I'm actually one last question here you go home tonight for dinner and you got to look your wife in the face she's sitting across the table from you and say honey today I turned on an acquisition offer for half a billion dollars what is her reaction sure let me let me ask that differently would you if Larry Ellison writes you a $509 check to acquire the company do you sell you know that question comes up a fair bit because obviously I'm not gonna be here in another twenty or thirty years and here's the honest answer it depends upon who's offering the check a check from an organization that I admire that treats its employees well that it's going to grow the business expand to new frontiers and can do a better job of growing the organization that I do then I can I'll take a serious look at that a check from an organization and there's a lot of them out there which are known from essentially strip-mining businesses buying it for no more than the customer base replacing the employees with low-cost alternatives will just keep it running for a few years as the money flows in that I probably wouldn't consider very goes out from collet be humble stay focused and never believe anyone that tells you it cannot be done he launched his company almost gone you're gonna hate me for this almost the year I was born in 1992 maybe one he's now well over a thousand customers millions of seeds doing somewhere between call it 10 and 30 million dollars annually maybe he breaks that healthy healthy annual retention over 94 percent willing to spend six grand to acquire a customer because they're worth over 500 grand to them in the long run he's spending very little on paid opposition each month less than 50 grand his team is between 50 and turning 50 people out there in Redwood City focused on building no code software Colin thank you for taking us to the top Thank You Nathan