How Alfresco CEO Bernadette Nixon grew to $100M revenue and 1.8K customers in 2018.

hello everyone my guest today is bernadette nixon she is the ceo of alfresco and leads company strategy for growth customer commitment and culture she she's an experienced global leader with a proven track record of growing some of the leading companies in the market and has a wealth of experience in the process and content management industry as a whole before joining alfresco bernadette served as president of sdl plc a global software and professional services company after having grown its sales team as chief revenue officer bernadette are you ready to take us to the top absolutely okay so i feel like alfresco is one of these companies it's actually pretty large but a lot of people maybe haven't heard of it because you do so many different things so kind of put it in a nutshell for us what's the company do and is it a pure place ass company uh we're a pure play subscription business yes uh so alfresco is a fast growing open source software company and we've got a digital business platform at its core the platform has process automation and content management services and then a great app dev framework on top to build your own engaging modern user interfaces so the space we play in it used to be known as ecm and bpm uh but now in the more modern times is known as process services and content services and certainly the way we play there is in a cloud-native way yeah and just quickly give me a story of how maybe a customer is using you to really bring it home yeah sure i mean you know if you think about nasa for example they look to us to help modernize their processes they've got lots of processes internally and all those processes have contents that are associated with them so as they're you know playing their part in the space station or all the different ways to advance um their mission they are using us to automate processes and to be the custodian of all of that information and it could be pictures or video as well as documents and they need to you know have it available for 70 years so just speak here bernadette this is like a really sophisticated intranet it's not content published out to like the community the world it's it's internal processing documentation it's internal most often most often yes it's internal processes and your internal enterprise class content very cool very cool okay and i'm sure you serve a ton of different customers but on average are we talking you know million dollar a year deals 100 grand 10 million generally where do you fall well we've got open source routes so a lot of people used to know us as the cheap and cheerful open source content guys and you know a lot of companies that are with us from those days pay us probably 20k a year but over the years we've we've gone at market in terms of serving some of the largest companies and governments globally and those customers can end up spending you know millions with us yeah so would you say maybe a fair average there's a million a year or something like that i'd say people start at probably 200k and they build up from there i see if they're expansion revenue etc yep exactly very cool now let's i want to put this on a timeline because the business has gone through all kinds of crazy changes and things like that what year did you join i joined in january of 2016. okay and what year was the company founded the company was founded in the uk in 2005 2005. okay so what had happened in 2016 both in your own life and on the other side of the company that made it a good fit for you you know i'd always believed in this notion of process and content coming together because every process typically has some content associated with it um and so i believed in the vision and the mission for the company and given where they were in their stage of evolution i also thought i could help i'd seen some of the movie before in terms of some of the things i thought they needed to overcome to achieve what i would class you know more breakout growth which is what we've been able to do since 2016. yeah now last year uh you know there was you know murmurs on the street that the company was for sale but it sounds like last year there was an actual event with some folks associated with thomas lee the private equity firm walk us through what happened there yeah absolutely we got inbound um interest and so we took the process seriously and that culminated in us um getting an exit in march of this year and we're very pleased to say that uh th lee are our new investors now and um they're excited also by their new investment because we are a growth thesis for them uh this isn't an uh an opportunity for them to get the red pen out this is a growth investment strategy and that's based upon the momentum that we're seeing in the market which is fantastic when you joined in 2016 did you know that like your one of your jobs was going to be find a strategic partner like this or was this a total surprise i figured there would be an exit and in order to get the kind of exit that we wanted we needed to grow the business and so i wasn't focused on an exit i was focusing on growing the business and building a really strong business which is what we have yeah now obviously you're putting together all kinds of pro formas as you're going through due diligence and data rooms in this process and sometimes the pro formas you know you look back six months after the acquisition you go oh they're working out and sometimes you go oh my gosh we were totally wrong what is something i know this is tricky for you to figure out but find something where you guys had a thesis together you said this is what we think is going to happen and it just didn't happen one thing that just didn't work like you thought it would uh perhaps i should touch wood but we've not hit that point as yet so your pro forma has hit exactly how you expected it to hit pretty much i've never seen that pretty much what margin of error would you say i'm not gonna go there i'm not gonna go there but we're pretty we're pretty much on the money right now okay that by the way that's so rare i mean i've seen the biggest companies even when you look at like rjr nabisco and that whole deal i mean they put together performance rarely if someone tells you we're going to do you know 100 million next year i can guarantee you're not going to do 100 million it's going to be like 98.5 or 110.3 never does it actually come out exactly you're saying you know what it feels good we're within a good margin of error and you don't want to say anything that you learn or that that maybe went differently i'm sure that we'll i'm sure we'll have some of those moments but we're we're on we're in a really good place the momentum that we've got in the marketplace is really quite incredible and that's you know not only due to the work that we're doing but the strategy that we've put in place the partners that we've chosen to work closely with we are an aws first product strategy uh we're moving to multi-cloud but you only have to look at the growth figures that um that both aws or azure are experiencing right now and when you're cloud native as we are in our new versions of the software then you know we've got a great story yep yep very good okay let's get some of some of the other kind of information here around kind of cohorts and product and where you see the space going so first off launch 25 2005. you joined in 2016. uh obviously today is 2018 what have you guys scaled to in terms of total customers using the platform uh you know there's multiple different ways of measuring that but roughly about 1300 1370 customers so when you look at the number of users that we have it's in the millions yeah well because it's open source yeah not just because it does open so it's not even counting the open source element of that i mean the the commercially paid stuff okay so you have millions of people paying that put out a credit card and they're paying you monthly some amount of money there's millions of users of our content platform in our process platform or our records management government services yes well no my question specifically is you said commercial so when you say commercial you actually mean they are paying for they're not using it as a user they're actually paying for the software we are a b2b so we're not selling to individuals so you know one particular customer for example cisco might have between a hundred and fifty thousand and two hundred and fifty thousand people using us so when you look at all of the both users we're in the millions seats yes exactly good way to put it yeah yeah got it now okay got it 1370 logos and then millions and millions of seats you got it got it very cool okay and how are you getting new customers what you know tell me about the team today is there an inside sales approach we've got both we've got um inside sales and we have entertared sales and in fact we're actively growing the um enterprise sales team right now um to scale up for the next level of growth um so you know the lower end as i said you know you can get a pretty short um buying cycle if somebody's spending you know 20k for a departmental solution but if they're about to put down you know half a million or a million then you're into the classic enterprise sales cycle so what's the team size today total team total team across the company about 350. 350. and obviously the company i think you guys had raised before the the exit uh that you guys went through last year and what was what did you guys raise i think like 90 or 50 million something like that and no that was um we raised 45 2015 yep but but sorry total in the company since founding 2005. was total funding about 92 million before the take price before the relationship with the private equity firm probably i only started counting at the 45 but that's when you joined right yeah it was just before i joined yeah you did you come in on that round of the investors say hey contingent russ investing you got to bring in bernadette um i don't know that it was that direct of a correlation but they knew that they needed to bring in um i came in as the chief revenue officer and so they needed they knew they needed to bring somebody in to grow the company and take it through the next phase of growth yep yep very cool okay so uh so total team plus today is 350 you're scaling up um walk me you know landing these kinds of accounts obviously you can afford a pretty high kind of fully weighted cac in terms of just pure amount now payback period obviously is a ratio so i'm curious from a payback period perspective how aggressive are you being you get paid back in a year or two years or six months what do you look at um we look at three different numbers um but to keep it simple you're looking at depending upon which ways you you you actually calculate that is the magic number is it you know is it bessemer is it the way that salesforce does it so you're looking at anywhere between sort of one point six and and two just over two yep and what do you you know there are a lot of different ways to measure this for your company what is most effective in terms of being a leading indicator or a lagging indicator well i think the interesting thing to look at with us is we're a platform company and the beauty of the platform is it can do many different things for our customers and so from that point of view um we are we get engaged in a wide variety of use cases that we can solve so you know there are multiple different sales plays that we run at any one moment in time so i think you know we try not to get overly obsessed on one of those numbers we know where we stand and there's um you know a path forward that we map i'm not going to get into specifics but there's an improvement path forward that we map out now when you say improvement that can actually be tricky because pink identity you know he was just on the show yesterday acquired by vista i think probably around you guys the size of ar maybe a little bit bigger but his answer to that when he said improve was actually increase what they could spend on cac for a new dollar of ar because that you know usually who can whoever can pay the most for a customer wins that customer so when you say improve do you mean drive your dollar based cap down or actually get more aggressive and drive it up uh there are going to be periods in your history where you drive the spend up and ultimately over time you drive it back down so we're growing the sales force right now so maybe there is a slight blip up that happens and then we'll certainly um improve it because one of the the main figures that that we uh we look at probably more meaningful in the short term on that is time to uh time to first customer when uh when a new underworld time to first customer so for it for a new ramping sales force so always focused on how quick can we demonstrate the value to somebody new coming into the funnel yep yep interesting and you said just be clear you're spending anywhere between a dollar sixty and two bucks right now to get a new dollar of roughly we're trying to drive that down yeah that's great very good and then um what growth rate obviously growth is really critical what are you guys growing at your every year well when you i mean we're a private company we don't disclose a lot of those figures but if you take a look at our bookings growth last year it was 50 year-over-year growth or you could look at it as six times the market kaga yep yeah that's healthy growth and then you know it was reported you know in 2017 you guys were doing somewhere around a 60 million dollar run rate uh what what i mean when you look at that run rate what do you hope to see you know year over year is 50 a good growth rate a bad growth rate where are you trying to settle in at um so we take a look at you know we take a look at the short and the long term obviously um and we take a look at pushing the boundaries i'm not going to disclose you know we're a private company so i don't disclose those figures uh publicly nathan well that was sorry what i just quoted was actually already quote there were some ceos before you i think before you came in that a lot of these numbers were actually quoted and disclosed so i'm only referencing those numbers sure i mean we've broken through the the 100 million mark and you know we're looking looking at you know how do we double it yeah well by the way i mean i can i could take two numbers you gave me these are not going to be accurate but i could take 1370 your customer your logo count times what you said your first year acv was which was 200 grand right and that puts you at about i mean that puts you at huge that puts you about essentially 22 million bucks a month so obviously i think it's probably a little bit bigger than what you're actually at today because maybe the acv is a little is it maybe lower start new sales reps are actually closing lower level deals well if you also go back in our history with some of those folks that know us from our you know open source cheap and cheerful content days you know they could be starting with 20k as opposed to you know because they're coming online at you know half a half a million even yeah so sorry your historical average might be lower than 200 000 acv but your new you know the new ramping for sales people the new quota targets the new funnels they're all built around at least 200 to 500 000 first year acv oh yeah that's great one more i love someone coming from someone like you who you led the sales you were chief revenue officer and then growing into the ceo world i love that because i can ask these these questions that most people don't think about so let me ask you some other things what ratio did you decide i mean you came through the trenches did you decide to set in terms of the ratio between whatever your fixed costs are with the sales people and what quota you want them hitting per year is like a 5x you want them to be 6x that what is it typically um so in some instances i get to based quotas but more often than not it's one person one quota and i peg the quotas at what i believe is fair given where we are in the market so when i came in i i pegged the quotas and i've only raised them ever so slightly since i came in and that's because um i want myself people to be focused on doing the right thing for the customer and uh having a fair quota um as well along the way so it's that balance i don't want them um so aggressive that we get um an um a customer experience that maybe you know like some of the legacy providers um and so i try to keep them pretty constant um and make them fair i want myself people making good money and as a result of driving value for customers ultimately just to be clear that you do this per person it's you they're all direct reports they're not direct reports i've got a management structure in place but do you set a different quota per person based off what they're managing or is it per rolls there's different classifications of sales people so per role you're talking like an sdr might have this an account executive might be this success you know person interesting last question here before we wrap up expansion revenue is obviously critical how are you guys driving expansion revenue like what are the pricing axes you drive up usage or seats or what um so we i mean the model that we have is users and core based um but the way that we look at driving ultimately the revenue is by having um you know really good launches of new products uh each year and one of the new things that we're going to be focused on is really making some great improvements to the overall developer uh evaluation experience because a lot of a lot of our customers download the the platform play with it and say you know what i really want to you know bring these guys in because this is really interesting so we're going to be focusing on on driving that developer experience and really improving it makes me great for them and when you analyze a cohort of new customers from say a year ago and where they're at today with the net revenue retention on that cohort are you guys north of 100 at this point yeah we're best in class that's great so i by the way i would say best in class is like 120. so your expansion more than outweighs your churn revenue by at least 20 points is that do you agree um there's multiple different ways that you can look at this net growth all the rest of it um but we're definitely best in class when it comes to it and we're spending the business which is great yeah very good bernadette okay easy questions famous five number one what's your favorite business book oh my lord probably execute it's uh probably 10 years old now or more but executed my favorite number two is there a ceo you're following or studying right now uh i wouldn't say i'm following or studying i looked at various different ceos i picked up some stuff from the splunk ceo recently listening to uh one of uh one of his presentations which ceo splunk splunk oh splunk ceo very good number three what's your favorite online tool for building your business my favorite online well evernote is my brain on paper [Music] but i thought um i do mind maps all the time and i'm looking at solving a problem so a mind mapping app on my ipad which is i thought which is called what i thought i sort thoughts yeah yep yeah that's okay that's i want to just be clear so our listeners could use it if they wanted all right number four how many hours of sleep to get every night oh lord um not enough anywhere between uh six and a half and seven and a half okay fair enough and what's your situation married single kiddos uh married but no kids no kids okay that's good and do you mind me asking bernadette about how old you are uh yeah roughly the half century okay very good you know we're going to say 50 years young last question what do you wish your 20 year old self knew oh my god um probably i don't know um you can solve most things but you can't solve everything yeah but sometimes just move on guys you can't solve everything sometimes you just have to move on she joined alfresco joint really moving up the ranks in 2016 the company before her had raised call it you know 50-ish million bucks there is another 45 million just before she joins about 90 million in the company before in 2017 about a year after she joined they were essentially taken private she's now continuing to drive incredible growth over 100 really best in class in terms of net revenue retention over 100 percent serving over 1300 customers paying anywhere you know in the tens of thousands if they're older customers up to now they're sending new customers at the 300 400 500 000 acv levels growing rapidly with 350 people all around the world bernabet thank you so much for taking us to the top thank you nathan