Founder Interview
How Alleyoop Grew to 40 Customers and a Team of 70 with a Bootstrapped Demand Generation Model (Interview with Founder Stephen Hays)
- Interview Date
- February 4, 2019
- Interviewee
- Stephen HaysFounder and CEO
Company Metrics at Interview Time
Team Size (2019)
70
Year Launched
2010
Historical Snapshot
These numbers were reported by Stephen Hays during his interview with Nathan Latka in February 2019 and are a historical snapshot, not current figures. See Alleyoop’s current numbers.
Key Takeaways
- 01Alleyoop had about 40 to 45 customers at any given time as of early 2019
- 02The team totaled 70 people split between Buffalo, New York and San Juan, Puerto Rico
- 03Alleyoop launched in 2010 and was fully bootstrapped at the time of the interview
- 04Average customer pays $15,000 to $20,000 per month; entry-level digital-only plan starts at $2,500 per month
- 05Customer acquisition cost was roughly $3,000 to $4,000 fully weighted
- 06Mid-market and enterprise customers are expected to expand spend 20 to 25 percent per year
- 07Alleyoop's first big customer was Regus, the office-space company, which came in as a web lead from its SEO
- 08Alleyoop uses Outreach for the automation part of its outbound engine
- 09Alleyoop has taken equity for its work, including some that turned out to be worth nothing; Stephen Hays offered DiscoverOrg's Henry that deal, and Henry said no
- 10The company offers exclusivity to select clients, turning down all DiscoverOrg competitors
Company Metrics at Time of Interview
| Metric | Value | Source |
|---|---|---|
| Customers (2019) | 40 to 45 | Founder interview, Feb 2019 |
| Team Size (2019) | 70 | Founder interview, Feb 2019 |
| Year Launched | 2010 | Founder interview, Feb 2019 |
| Entry-Level Plan Price (2019) | $2,500 per month | Founder interview, Feb 2019 |
| Average Customer Monthly Price (2019) | $15,000 to $20,000 per month | Founder interview, Feb 2019 |
| Customer Acquisition Cost (2019) | About $3,000 to $4,000 (rough estimate) | Founder interview, Feb 2019 |
| Expected Annual Expansion, Mid-Market and Enterprise Customers (2019) | 20 to 25% per year | Founder interview, Feb 2019 |
| Capital Raised | None (bootstrapped) | Founder interview, Feb 2019 |
Growth Breakdown
Revenue
Alleyoop operates on a subscription model with recurring predictable revenue. The average customer pays $15,000 to $20,000 per month, with an entry-level digital-only plan starting at $2,500 per month. The company previously required clients to commit at least $500,000 per year before productizing lower-tier offerings.
Customers
As of early 2019, Alleyoop worked with about 40 to 45 customers at any given time. Clients Stephen Hays named include DiscoverOrg and Outreach, which outsourced part of its SDR function to Alleyoop early on; Regus, the office-space company, was Alleyoop's first big customer. The company offers exclusivity to select clients and has turned down all DiscoverOrg competitors.
Team
The team stood at about 70 people in early 2019, with offices in Buffalo, New York and San Juan, Puerto Rico.
Funding
Alleyoop launched in 2010 and, at the time of the interview, was fully bootstrapped and had raised no outside capital. Stephen Hays confirmed the company was operating at breakeven or cash flow positive.
Growth Strategy
Strategic SEO Brought In the First Big Customer
Alleyoop's first big customer, the office-space company Regus, came in as a web lead from its SEO. Stephen Hays does not remember the search term, but the SEO was strategic, not accidental: he had hired "a gentleman who's a scientist in SEO before anyone was really doing that."
Productizing Offerings for Broader Market Access
The company previously required clients to spend at least $500,000 per year. Over the past year before the interview, Alleyoop productized its services into tiered plans starting at $2,500 per month, allowing growth-minded companies to get started without a large upfront commitment.
Expansion Revenue from Existing Clients
Alleyoop models 20 to 25 percent annual expansion from its mid-market and enterprise customers. For the newer, lower-end market, Stephen Hays said he did not have great data yet.
DiscoverOrg as Referral and Reference
Henry turned down the equity offer, but Stephen Hays says what DiscoverOrg gives Alleyoop is "not just financials": as "a referral and a reference," DiscoverOrg tells Alleyoop's story "in a way that we couldn't tell our story," and "it comes back in a big way."
A Product of the Product
"Our internal engine is quite good," Stephen Hays said, and Alleyoop has to run on what it sells: "I always say, guys, we need to be a product of the product." It uses Outreach for the automation part of its outbound engine, and he named DiscoverOrg as his favorite online tool for building the company.
Best Quotes
“I think if you ask them, they'll tell you that we've certainly been an important part of their growth story. But they were gonna do they were gonna do great things regardless the way they're built, the way they're wired, and the type of people that that work at DiscoverOrg. Just an exceptional organization.”
“I think you have to look at a company's history, who have we done it for, how do we do it. And I think if there's not cultural, philosophical, and operational alignment, you shouldn't do it. If you're someone who can't handle not seeing and knowing every single thing, then outsourcing is not an option.”
“There's probably 3,000 companies that do what we do. There's probably three or four of them that if you really care about your brand and you really care about operational aspects of the business and it's not results at all costs, there's only three or four companies that you could outsource to.”
“Our average is probably 15 to 20.”
“We have about 40, 45 customers at any time.”
“It wasn't accidental. It was strategic. I had hired a gentleman who's a scientist in SEO before anyone was really doing that. And he was just amazing. And so we just did that.”
“We expect our mid to enterprise customers to expand 20, 25% a year each.”
“It probably costs... I I don't have a great number, but it... It's it's probably 3 to $4,000.”
“We have about 70 people.”
What Happened Next
This interview captured Alleyoop at a specific moment in February 2019, when the company had about 40 to 45 customers, a team of 70, and was fully bootstrapped. Over the year before the interview, Alleyoop had started offering pieces of its programs as stand-alone products, including a $2,500-a-month digital-only plan, so that growth-minded companies had a way to get started. For current figures on Alleyoop, visit the company's live profile on GetLatka.
View Alleyoop’s current profile and metricsFull Transcript
Chapters
- 0:01Introduction and Alleyoop Overview
- 0:33Working with DiscoverOrg
- 1:20How Alleyoop Scaled DiscoverOrg's SDR Function
- 3:11Managing the Risk of Outsourcing Sales
- 4:36Exclusivity and Client Loyalty
- 6:58Subscription Model and Service Tiers
- 9:33Average Customer Pricing
- 10:47Customer Count and the Outsourced SDR Model
- 13:44Company Launch and First Customer
- 14:26SEO: Strategic, Not Accidental
- 15:36Team Size, Offices and Churn
- 17:19Expansion Revenue and CAC
- 18:14Famous Five Rapid Fire
Introduction and Alleyoop Overview
Nathan Latka
00:01Hello, everybody. My guest today is Stephen Hays. He's the CEO and founder of Alleyoop, a demand generation agency that fully real... Realizes the culmination of sales, marketing, tech, automation, and creative thinking. Over the past decade, his company has grown from 10 to 50 people and it's been honored to drive revenue for companies like Adobe, DiscoverOrg, and Cleveland Golf. They provide the ultimate assist to growth minded companies. Alright, Stephen, you're ready to take us to the top?
Stephen Hays
00:23I am. Thank you.
Nathan Latka
00:25You bet. Hey, what you're doing must be working because DiscoverOrg just, you know, paid a lot of money for their number one rival, ZoomInfo. So that's all you. Right?
Working with DiscoverOrg
Stephen Hays
00:33Well, all would be an overstatement for sure. I have to tell you, DiscoverOrg is one of the best companies we've ever worked with. They would have done amazing things without us, But I think if you ask them, they'll tell you that we've certainly been an important part of their growth story. But they were gonna do they were gonna do great things regardless the way they're built, the way they're wired, and the type of people that that
00:53work at DiscoverOrg. Just an exceptional organization.
Nathan Latka
00:56Back in episode 15, 17, Henry came on and talked about how they passed $165,000,000 in ARR, and he broke down how their sales operation worked, even down to the ratio of SDR to account executive to customer success rep and how the CS folks are responsible for expansion and they are quota carrying as a team. Walk me through how your lead generation services kind of feed into the machine he's built internally.
How Alleyoop Scaled DiscoverOrg's SDR Function
Stephen Hays
01:20Yeah. So what we found is the way we start with the company kind of evolves over time as they grow and we grow with them. So when we started with DiscoverOrg, they had two SDRs. They were kinda trying to figure out, does this work in their this? That was five years ago. K. Approximately five years ago. So I flew out, met with Henry, and said, hey. Listen. You guys have the most amazing platform I've ever seen.
01:45More of the world needs to know about it, and good things will happen when you get in front of the right people. And so we scaled the heck out of it, and we offered to them just technology that maybe they weren't quite ready for in house. We offered a marketing capability.
Nathan Latka
02:00What was it? What was some of the tech?
Stephen Hays
02:01Just some automation outreach type sequences. At the time, we were using a different platform than we do today, and some of it's a bit dated in terms of even talking about it.
Nathan Latka
02:11Well, tell us what you're using today. What automation platform you use today?
Stephen Hays
02:14So today, we use Outreach for that particular part of the outbound engine. At that time, we were using three or four different tools to accomplish what we do today with Outreach.
Nathan Latka
02:23Yep. No. It's very good. Again, we had we had... And and Manny's killing it as well. He thinks they'll hit 10,000,000 per quarter here by the end of q two. Now it's episode eleven thirty six. So you are riding the backs of whales, that's for sure.
Stephen Hays
02:36Yeah. And Outreach outsourced part of their SDR function to us early on as well. And one of the benefits you see is even a company like Outreach who has an amazing SDR function, we help them kind of learn a little bit, grow a little bit, and best practices sharing and competition.
Nathan Latka
02:36Yep.
Stephen Hays
02:36When they outsource part of their function, lost their internal teams. Production went up by 20%.
Nathan Latka
02:55So let me ask you a question. I could imagine a CEO listening to this going, yeah. But I I love what Nathan and Stephen are talking about right now. I'd love to I'd love to pay Stephen to do this, but it it makes me nervous putting something so critical to our business externally. How how... What would... What advice would you give that CEO to manage that risk?
Managing the Risk of Outsourcing Sales
Stephen Hays
03:11I think you have to look at a company's history, who have we done it for, how do we do it. And I think if there's not cultural, philosophical, and operational alignment, you shouldn't do it. If you're someone who can't handle not seeing and knowing every single thing, then outsourcing is not an option. It's just... You should do it in house because it wouldn't be fun for anybody. But there's certain parts in your life and certain moments
03:36in your life where you have to make decisions that equate to scale and equate to success and a level of success you simply wouldn't have found on your own being a solo type person or company mindset. So what I would say to you is there's probably 3,000 companies that do what we do. There's probably three or four of them that if you really care about your brand and you really care about operational aspects of the business
04:03and it's not results at all costs, there's only three or four companies that you could outsource to.
Nathan Latka
04:03Yep.
Stephen Hays
04:03So it's actually not that hard of a decision even when you think of it through the right lens.
Nathan Latka
04:13Yep. No. By the way, this is a space that is extremely hot. Know, if people wanna build this same kind of thing internally, just your software costs per person that you have operating the machine can get expensive. And I'm looking at some of your pricing starting at $2,500 a month, going up to $5,000 a month for 1,500 target prospects for either, you know, meetings or demos, etcetera. I mean, so I can see where there's cost savings
Exclusivity and Client Loyalty
Nathan Latka
04:36here and efficiencies. What about knowledge? Right? So if
04:41a Henry uses you for DiscoverOrg and then their competitor, ZoomInfo came along and said, hey, we want to use you too. Wouldn't DiscoverOrg be concerned about the the knowledge they've essentially paid you to learn building their system you would just then give to ZoomInfo?
Stephen Hays
05:00Well, there's different types of things that we do with certain companies. So I'll give you... Yeah. I can tell you flat out that we've turned down working with every every DiscoverOrg competitor on the market.
Nathan Latka
05:10Okay. So you you do offer exclusivity?
Stephen Hays
05:13We do. We don't offer it to everyone and we don't offer it always, but it's certainly an option. And DiscoverOrg was worthy of that loyalty and that commitment and no no regrets. And certainly we've done that for others.
Nathan Latka
05:30So, Stephen, do you... If I was in your shoes, and this isn't a good trait of mine, but it is a natural human one. When I read that Henry is passing 160,000,000 in ARR and just doubled the size of his business buying ZoomInfo, so call it $20,250,000,000 bucks. As a private B2B SaaS company, that's one of the larger ones. And maybe he's following maybe a Qualtrics route, where they then go get bought up by someone big.
05:54I can't help but think, my gosh, I wish I took equity instead of making Henry pay me $2,500 a month back five years ago. Do you ever take equity for these? And if so, have you ever ever ever taken equity and turns out they're worth nothing?
Stephen Hays
06:07Yes and yes. And I asked Henry... I made that offer to Henry, all those years ago. He said no.
Nathan Latka
06:16Yeah. Yeah. Cool. Yeah. He he had doubled down on himself. That's funny.
Stephen Hays
06:20He did. Yep. And... But you know what? Them as a referral and a reference and and telling our story in a way that we couldn't tell our story, it it, you know, it comes back.
Nathan Latka
06:20Yeah.
Stephen Hays
06:20It comes back in a big way regardless of of... It's not just financials. So...
Nathan Latka
06:35Yep. So, Stephen, my audience is gonna learn two, I think, things from this, you know, the next ten minutes of this. One is you're running your own business and how you grew it. But the second is they're all SaaS. My audience is almost all b to b SaaS CEOs, and they're trying to build their own internal engines, they're gonna learn from you how you did it for other people. So let me focus on the former first,
06:52your business. Is it a true agency or do you have true recurring predictable revenue?
Subscription Model and Service Tiers
Stephen Hays
06:58We have true recurring predictable revenue.
Nathan Latka
07:01Okay. So there's a software component underlying the the human aspect or no?
Stephen Hays
07:04There are software components, but it's a subscription.
Nathan Latka
07:09Okay.
Stephen Hays
07:09Essentially, includes technology
Nathan Latka
07:09Okay.
Stephen Hays
07:09Marketing services, sales resources, and consulting.
Nathan Latka
07:09Okay.
Stephen Hays
07:09So our programs all come with playbook design. They all come with database services. They all come with creative services. So for most of our customers, we're building a package that includes video production, explainer video production, call one analysis, recommendations. We're aligning to someone doing a demo. We're gonna make darn sure their demo is top notch. We don't wanna align to someone who has a bad demo.
07:41And no offense to them. Their demo might just be bad. Their product might be great. So we're gonna help with that. So it's a bit... It's a subscription that includes different layers of services depending on when someone comes to us, how how fully baked or not baked they are. Their product might be fully baked, but their go to market strategy might not be.
Nathan Latka
07:41Yep.
Stephen Hays
07:41So we have an in house agency, data team, tech team, services team
08:06to support that effort. Because we also don't want our SDRs going to market half baked either. That's not a rewarding experience. We want them to be professionally supported and have success rates that far outpace industry averages so they can have success and make money too.
Nathan Latka
08:22Yep. So, Stephen, how... Kinda walk me through on average. What's the company gonna pay you per month for kind of, again, your average plan?
Stephen Hays
08:29Sure. So a digital only plan that replace... Replaces someone putting, say, HubSpot in is $2,500 a month.
Nathan Latka
08:38Okay.
Stephen Hays
08:38So that includes data, content services, creative services, delivery of messaging to the market, and it includes lead generation and response management.
Nathan Latka
08:49What's the
08:49end point though of your...
08:50Of that part of the process if I pay you that? Is it a scheduled meeting or... What is it?
Stephen Hays
08:54It's a lead. So it's
Nathan Latka
08:54Okay.
Stephen Hays
08:54Scoring of interaction of content and responses.
Nathan Latka
09:00Okay. Got it. And then what? Assume it's more if you didn't have... If if I pay you to take that lead and actually get them booked on a demo, it's what?
Stephen Hays
09:07That's right. So the next level is called... So that first offer we call Nurture. The second one we call Nurture Pro, and Nurture Pro puts a partial resource on the program.
09:20So they're keen to book meetings.
Nathan Latka
09:21Okay. Got it.
Stephen Hays
09:23Low volume.
Nathan Latka
09:24And then I assume you probably upsell from there. So give me give me an average. What is the average, you know, group that's paying you paying you, like, $5,000 to $10,000 a month ish? Or what's it look like?
Average Customer Pricing
Stephen Hays
09:33No. Our average is probably 15 to 20.
Nathan Latka
09:38Okay. Got it. Yeah. So you're you're... You are not a kind of low touch high volume organization. You're kind of like maybe they start at $1,200 a month, but you quickly get them up to $10,000, $15,000, $20,000 a month. Henry, I'm sure was way higher than that.
Stephen Hays
09:52Yes and no. I mean, our company's evolved over the last three years pretty rapidly. So we've productized our offerings so that we never had a $2,500 a month offering.
Nathan Latka
09:52Yeah.
Stephen Hays
09:52We had an offering that if you weren't gonna spend $500,000 a year, we just weren't gonna work with you.
Nathan Latka
10:06You couldn't. It wasn't effective.
Stephen Hays
10:08Right. We just... You know, we didn't we didn't have an interest in or didn't have the capability to productize at that time. But over the last year, we realized there's lots of value in pieces of what we do, and parsing them out and offering them as a stand alone product has a lot of value for our customer and for us. We really didn't wanna walk away from growth minded companies anymore. We wanted to be able to
10:33have a way for someone to get started.
Nathan Latka
10:33Yep.
Stephen Hays
10:33And the reality is if you wanna get started and you wanna go do HubSpot by yourself, it's very cumbersome. It's very time consuming, and the failure rate's really high.
Nathan Latka
10:43Yep. How many how many customers are you working with today?
Customer Count and the Outsourced SDR Model
Stephen Hays
10:47We have about 40, 45 customers at any time.
Nathan Latka
10:51Okay. And do they... Do you see a point at which people say, listen, Stephen, you've been amazing, but we're at 20 SDRs now. You've given us the playbook. That's gonna allow us to scale to a 100. We're gonna stop paying you here for a little bit and just take this playbook you built for us and bring it internal. I mean, do you see that happen or no?
Stephen Hays
11:10It happens a lot less than than it used to. And I think as the SDR function has matured, you know, there's there's 50,000 job openings on indeed.com for SDR right now. Most of those are multi headcount, so there's probably at least a 100,000 open recs for SDRs in The United States. The average cost to run an SDR in The US right now is $97,000 a year.
Nathan Latka
11:36Including salary?
Stephen Hays
11:37Yes. Yeah. In a high cost city, it's $123,000.
11:41So people are thinking... So here's how people are thinking about it today. I can incubate with an outsourced provider. It's a great way to learn. But people don't really wanna run a production SDR function in house anymore if they don't have to. There's just not a lot of reason to do it. Even if you go to Google and they have an SDR team, and you go and you say, who's the SDR team at Google today? And
12:05you go back in six months, they're all different people.
Nathan Latka
12:08Yep. So, yeah, the the turnover rates... That's... By the way, that's how a company like Manny's grows... Outreach grows so fast is they only have to sell to one salesperson. That salesperson will work five jobs over the next two years. So they go to five accounts.
Stephen Hays
12:19Yeah. So the new way to run an SDR program is to run a strategic internal SDR program. So if you're running an account based marketing program or an enterprise play, you can put your SDRs in house on top of that. So instead of having 20, you might have four.
Nathan Latka
12:35Got it.
Stephen Hays
12:36It's now your AE feeder team, which is wonderful. Right? It's a great way to pay go. You're paying an SDR, but they're gonna become an AE. So it's a self funding thing. But the truth is when you have 25, 30 SDRs, only four of them are gonna become AEs.
Nathan Latka
12:52That's right. Yeah.
Stephen Hays
12:52So you're get... You're getting the same benefit without having... Without the need to have another 20 to figure that out. So you can outsource your production SDR function to us or someone like us, and you can in... Internally do your strategic SDR team, and you get all of the benefits. You get scale.
Nathan Latka
13:11Yep.
Stephen Hays
13:12You get
Nathan Latka
13:12And, Stephen,
13:13I I wanna jump in because I I get... I think my whole audience understands the product. They totally get the value. They totally get why you're why you're successful. We have... We're short
Stephen Hays
13:20That nuance is really different. This strategic SDR team is a new thing. Like, people are thinking about it very differently now than even they were a year ago.
Nathan Latka
13:29Well, instead of instead of experimenting with them bringing on fixed cost salespeople and then burning and churning through them as they work or don't work, they have a SWAT team of highly talented ones. They work with you to do the testing, and it makes more sense.
Stephen Hays
13:42And the production, the scale. Yes.
Company Launch and First Customer
Nathan Latka
13:44Yeah. Okay. Good. We got about two minutes left here. So I have a couple other questions I wanna rock it through. When did you launch the company? What year?
Stephen Hays
13:512010.
Nathan Latka
13:522010. Okay. And have you bootstrapped or raised?
Stephen Hays
13:55Bootstrapped.
Nathan Latka
13:56That's great. So so totally bootstrapped this up. What... So 2010, walk me through. You got your first 10 customers.
Stephen Hays
14:03Well, our first big customer was Regus offices.
Nathan Latka
14:06Which one?
Stephen Hays
14:07Regus.
Nathan Latka
14:08Ah, okay. Like the hotel chain?
Stephen Hays
14:11No. Office space. So the, before there was a WeWork, there was a Regus.
Nathan Latka
14:17Yep. Okay. And how'd you get them?
Stephen Hays
14:20Web lead, believe it or not.
Nathan Latka
14:22And how did the web lead find you? What were you doing to attract them?
SEO: Strategic, Not Accidental
Stephen Hays
14:26We were doing SEO.
Nathan Latka
14:27Okay. And what was the search term? Do you remember?
Stephen Hays
14:30I I don't remember. I wish I did. It's like the first dollar bill of your business. I wish I remembered what that was, but I don't.
Nathan Latka
14:36Was it accidental, or did you have a team specifically focused on, like, five strategic keywords?
Stephen Hays
14:42We... It wasn't accidental. It was strategic. I had hired a gentleman who's a scientist in SEO before anyone was really doing that. And he was just amazing. And so we just did that.
Nathan Latka
14:52That's great. And talk to me a little bit here about growth. So if you've got 45 or 40 ish customers today at $15,000 a month, we can obviously back into whatever $600,000, $650,000 a month. Is that accurate?
Stephen Hays
15:04It is.
Nathan Latka
15:05And where were you about a year ago?
Stephen Hays
15:07$4.04 something.
Nathan Latka
15:08Okay. I mean, that's health... That's healthy growth. What... Have any VC firms tried to acquire your company and basically bring your whole organization in house for all their portfolio companies?
Stephen Hays
15:17You know, it's something that I thought would would happen. Like, OpenView Venture does this as a service for their portfolio.
Nathan Latka
15:24A lot a lot do.
Stephen Hays
15:25Yeah. I've talked to some firms about it. I think I think they all just wanna do it on their own, honestly.
Nathan Latka
15:32Yeah. Okay. Makes sense. And then what's your team size today?
Team Size, Offices and Churn
Stephen Hays
15:36We have about 70 people.
Nathan Latka
15:38Seven zero. And where's everyone based?
Stephen Hays
15:41Oh, we have an office in Buffalo, New York and San Juan, Puerto Rico.
Nathan Latka
15:44In New York. Oh, that's great. And I was gonna say it's it's much better right now, I think, probably being in Puerto Rico where it's warm and hopefully sunny versus New York. Right?
Stephen Hays
15:52It is.
Nathan Latka
15:52Yeah. Alright. Very good. And then, obviously, well, you're bootstrapped, I assume you're operating at breakeven or cash flow positive. Right?
Stephen Hays
16:00Yeah.
Nathan Latka
16:00And then walk me through a churn. So when you look at your... Not net because I think your net's probably way over a 100% with your expansion revenue. But when you look at your gross revenue churn annually, what's that at about?
Stephen Hays
16:13I don't have an exact number on that for either way we measure things. Some things get bigger, some things get smaller. We don't lose a lot of customers. A lot of customers change.
Nathan Latka
16:22Upgrade downgrade.
Stephen Hays
16:23Yeah. So it's very fluid, but we don't lose many customers at all.
Nathan Latka
16:27So what's net revenue retention look like? Again, assume it's above a 100%. Yeah. Do you measure or is that something you don't measure?
Stephen Hays
16:34Well, I measure it, but not the way you're thinking. I don't measure it like a software company measures it, but I kind of measure it. And our comp plans are based on retention and those types of things. But I I don't... The way I measure it probably isn't very relevant to your audience, and it it probably isn't something that I would add much value in.
Nathan Latka
16:51Well, the... It is it is relevant. I'll tell you why. Everyone's trying to drive expansion revenue, right? Everyone trying to get someone to go from 2,500 a month to $5,000 or $10,000 a month. At the same time, you'll have some accounts in that same cohort that sign up that same month, maybe decrease by a grand a month. So what I'm trying to see is I assume you have predictability around, you know, $2,500 a month customer in
17:09year one is gonna expand to a $5,000 per month customer in year two. What is that expansion? Like, what expansion do you model in your pro formas to, you know, plan things like hiring decisions?
Expansion Revenue and CAC
Stephen Hays
17:19Sure. So we expect our mid to enterprise customers to expand 20, 25% a year each.
Nathan Latka
17:19Okay. Okay.
Stephen Hays
17:19Our new market, the low... The lower end smaller market, I don't have great data on that yet.
Nathan Latka
17:33Well, and and... Yeah. And that and that cohort is a little more harder to harder to predict. Very good. And then what's it... Look. You probably ask customers the same question before you decide to sign them or not. What does it cost you on average to get a new customer fully weighted?
Stephen Hays
17:47It probably costs... I I don't have a great number, but it... It's it's probably 3 to $4,000.
Nathan Latka
17:53Okay. So pay... Then you're getting your money back there in, you know, two, three months max.
Stephen Hays
17:58Yeah. Yeah.
Nathan Latka
17:58Very good.
Stephen Hays
17:58I mean, our our... Yeah. Our our engine... Our internal engine is quite good. You know, we
Nathan Latka
17:58Well, better be. That's what you sell.
Stephen Hays
17:58That's right. We are... I always say, guys, we need to be a product of the product. Eat your dog food. Don't do it if you're not gonna do it right. So absolutely.
Famous Five Rapid Fire
Nathan Latka
18:14Alright, Stephen. Let's wrap up with a famous five. Number one, what's your favorite business book?
Stephen Hays
18:19Favorite business book is probably Good to Great.
Nathan Latka
18:22Good. Number two, is there a CEO you're following or studying?
Stephen Hays
18:27I study all of our customer CEOs and learn so much from all of my interactions with them. Certainly, Henry is is probably my favorite
Nathan Latka
18:27Yep.
Stephen Hays
18:27Person I've I've... You know, one of... I shouldn't say that. He's he's someone who's very memorable to me and very important to me, but there's there's certainly others.
Nathan Latka
18:42Number three, what's your favorite online tool for building the company besides Outreach since you mentioned it already?
Stephen Hays
18:47DiscoverOrg.
Nathan Latka
18:49Number four. How many hours of sleep do you get every night?
Stephen Hays
18:53Oh, on average?
Nathan Latka
18:54Yeah.
Stephen Hays
18:55Probably five.
Nathan Latka
18:56Okay. And what's your situation? Married, single, kiddos?
Stephen Hays
18:59Married, five children.
Nathan Latka
19:01Holy mackerel. And how old are you?
Stephen Hays
19:03I am 44.
Nathan Latka
19:05Wow. You are a busy man. Okay. Last question. What do you wish your 20 year old self knew?
Stephen Hays
19:10To move to California.
19:12Move to California faster.
Nathan Latka
19:13Guys, there you have.
19:15Go ahead.
Stephen Hays
19:16That's right. That's it. Get moved to California, get into SaaS earlier and explore.
Nathan Latka
19:21Guys, there you have it from Stephen again. 45 customers paying him about $15,000 a month to help them automate their sales process, whether it's a lead, a meeting, a demo, whatever. Big companies like DiscoverOrg are using him. First customers back in 2010, Regus office space. He got them via an SEO term he had optimized for. Doing about $670,000 a month right now in revenue up from about $400,000 just a year ago. Healthy growth, profitable bootstrap team
19:42of 70 between New York City and Puerto Rico. They assume 25% year over year expansion kind of in their planning process and on their mid... On their enterprise and mid market accounts spending, call it 3 or $4,000 to get a new customer. So healthy payback period there. Stephen, thanks for taking us to the top.
Stephen Hays
19:57My pleasure. Thanks for inviting me.