How Allstacks CEO Hersh Tapadia grew Allstacks to $3.3M revenue and 45 customers in 2024.

hey folks my guest today is hirsch tapadilla he's the co-founder and ceo of all stacks the first software delivery intelligence and predictive forecasting platform helping engineering teams predict and quantify team productivity he's led teams like this across sas pharma medical device and supply chain and previously was co-founder of several ventures including ravioli labs an ml driven consulting firm certi rx an anti-counterfeiting solution for supply chain and med count a medical device for infectious disease diagnostics he's living in raleigh and is a graduate from duke and nc state hershey ready to take us to the top yeah absolutely all right where so where did you experience this problem was it when you were at you know ravioli labs or certain rx where did you find this problem yeah it was it was everywhere actually so i was running product engineering teams i think the the healthcare background created the exacerbated version of the problem because you have two layers of translation so when you look around your organization and you see marketing sales customer success everybody's really instrumented really data driven and engineering's not and then you have to further explain it to somebody who has maybe a more of a healthcare science background you're going through two layers of translation without any data and it was just always a point of frustration for me which is like how do i how do i help quantify this in a way that actually helps me advocate for my teams why are my teams actually doing really well what does really good look like yeah for my for my audience listening this is the use case of there's that annoying trello card that has been sitting in the doing this week for the past six weeks and for the business person it looks like no momentum is happening but everyone on the dev side knows there's a bunch of work happening so you are able to basically get insight into that insight into that and then help you understand when is that actually not happening as well so both the positive and negative outcome we're doing all the work that that we should be doing but there's other externalities that are causing it to go off track as well maybe it's really a lot more complicated than it is normally and so being able to highlight all those outcomes so then you can make a decision right your business counterpart can say hey i understand that this is uh this is going differently than it normally does i'm going to make different decisions now and so one of the things we think about a lot is how do we give agency back to all your stakeholders yup no this is great and it helps it helps engineers communicate progress to a sales team because the sales team is used to communicating things like quota and quota target and percent of quota hit yeah so help me understand how you're breaking this down i'm just going to screenshot your home page right so when you say like you have a couple things there's a progress bar there's velocity per week and there's scope remaining what do you set first like do you set a number of points per scope yeah so we we use the data that's already being leveraged in tools like jira for example so somebody's defined you know call it an epic right some body of work and they've either created a bunch of tasks inside of that or they've added story points that you know whatever process that they use and then what we've done is we've looked at your historical data to say when something like that materializes how does it typically go from start to finish and then we start tracking work against that and what we do is we look for deviations from that normal and normally it takes maybe a day to review code this one's taking four days to review code why is that right oh the code is really complicated it was rewritten a bunch of times seven people wrote it instead of one person so uh it's hard to review and each one of those has a historical factor that said last time something like this happened this thing got later and later or it got earlier and earlier and that gets worked into a forecasting model this machine learning algorithm that we developed that then predicts three things when do we think it's going to get delivered how is that date changing and how is the change changing so is it getting later faster is it getting earlier slower basically what we're trying to explain to folks is are we confident in what we're saying we're going to do or are we losing confidence what we're saying we're going to do because that second derivative explanation is how humans make decisions with each other tell me about pricing here you you're you're really clear on your pricing page everyone starts at 400 bucks a month but i imagine you're average like rpo is probably much higher than that what's the average customer or team paying you per month yeah so it's it's about the size of the company right so how big is the technology organization we call them contributors right the people that are working towards delivery so uh what we look at is kind of development teams starting around 20 30 developers and going up from there so simple math right uh we're looking at kind of 12k 30k 50k or like our typical starting bands per year yep oh per year okay well 12 oh oh it's 400 per year per month i was gonna say holy crap this gets big very quick if you've got a thousand people on one team paying 400 bucks a month that was a yearly price that was the yearly price i got it all right take me back to day one when did you launch the business so we started the business you could really call our genuine kickoff with techstars in austin q1 and 2018. so jeremy my co-founder and i we've been working together since 2008 straight through 13 years now so were you guys nice you just split 50 50 at the start you split 50 50 at the start it was oh nice sport time working together um and and we said let's uh let's kick this off and so we you know we incorporated the company just before that got into tech stars drove down to austin and uh and kicked this thing off right in january 2018. why austin why not i imagine there's a tech stars in raleigh right there wasn't a tech stars in raleigh at the time actually the tech stars in raleigh started a year later uh and it was in partnership with metlife we were deciding between uh austin and boulder actually and we looked at ourselves and said you know what are we really good at we're really good at product really good at engineering technology type stuff and so we wanted to go to a program that was shaped around go to market and the md in austin amos he's a real go to market guy and that's where we felt like we would gain the most and so we ended up going to austin um we met our first employee there hired him on our last day at techstars we um got our first first round of funding there uh with a with a really great partner and and we've actually have now a third of our team in austin um in in conjunction with raleigh well that's super cool okay so give me a little funding history here so you're not bootstrapped how much did you raise back right on day one in 2018 so tech stars you know it's the standard 100k 100k deal so in 2018 in total we raise about a million bucks uh as like our precede and then we've had subsequent rounds in 2019 and 2021 um of a seed in c2 so in all we raise about eight million dollars and tell me more the pre obviously it's a little data now because it's back in 2018 i mean today standard seed rounds i mean i've seen ones as small as five caps i've seen ones as high as like 50 caps on a convertible note like a safe it's been all over the place but back in 2018 what did you get like a one-on-five sort of deal yeah we what we typically saw on the market was like a three to five uh three to five cap on a seat you know that yep yep okay got it so maybe like a one on a force or a deal and i forget what was the standard tech stars deal back then how much equity was it was it seven percent it was uh six percent six yeah yeah have they changed that i don't think it's changed at all since since it started they've been they've been the same they've been they've actually been very consistent i know yc's switches around a little bit i think tech stars have been very consistent yeah do you compete with your friends that maybe went through reply to yc and just just to make sure that you made the right choice with the tech stars yeah it's actually cool we uh we had a bit of lineage there so there's a local program in north carolina called nc idea which funds um equity-free grants it's an economic development thing for startups and we went through that program and there was another company sitting next to us and they went through tech stars in austin the year before us and then we went through tech stars in austin on their recommendation and then we actually share an office with a company here that went through tech stars in austin a year later uh with our our recommendation so we've we've been able to really propagate this raleigh austin pipeline you've seen it all yeah you've seen it all that's very cool all right take me back to the first customer in 2018 where did you find him like can you name who it was do you remember yeah so the very first customer was actually a small company called farm shots um they're a satellite imaging company they ended up getting bought by a big agriculture company called syngenta and so in that time there was a there was a handful of these um seed stage ag tech satellite imaging companies and each one got bought by a different big ag tech so one got bought by monsanto one got bought by the asf and farm shots got bought by syngenta and they actually have have been our customer ever since that continue to be our customer i was gonna say so that's great for you because sygenta probably has more engineers that means more contributors that means higher acb for you and net dollar retention absolutely so that's the strategy folks you heard it here first go invest in companies that are small likely to be acquired and that is how you get into bigger bigger teams more seats we actually we actually really believe in the lane and expand motion i mean our net dollar retention is 173 whoa that's really i mean look i've i've done almost 3 200 interviews that's i would say top like five percent that i've ever heard so either operating off a very small base or you're killing it we have a we have a phenomenal customer success team and we have a model where what we do is we we work with a small part of the org we train them and then we expand out to multiple parts of the organ it gives us two uh two advantages one is we really learn how the org works and we can really make them successful but we create layers of experts within the org so when the next set of people come on board they don't just have us to work with they also have their peers who they can be really intimate with and we work with them through slack and microsoft teams and all these chat tools so we really become an integrated part of their team and so our you know one of our core values is that we can always help and what's important to that is we can always help doesn't mean it has to be just with the product we are a resource to our customers we try to be partners to our customers and how many now today farm shots was number one how many today we're at 45 45. okay great and tell me more about the csm structure everyone structures a bit differently how many customers success managers do you have currently we have three customer success managers um each one handles about a million and a half of quota yep um hold on what is that quote is that the book of business they start with and they have to expand that against a target or that's they have to expand the quota to over the year that's that's how much they have to start with to start with and you know if they expand beyond it you know we might reshuffle but what we find is that with that amount they can provide a really tight relationship with their customers a really healthy degree of support so will you say i mean you're setting goals right now for 2022 will you say to one of your csm's hey here's your 1.5 million book by december of next year 2022 our expectation is that you expand this by 100 or 70 and if you do that here's a commission yeah so we actually structure it slightly differently right so we're talking about this is how much we we think they can support because what it proxies into is like number of users number of size how many accounts things like that it allows us a really flexible delineation to say like here's kind of how many humans you can support now when they scale the thing part of their commission is based on how they scale the accounts and how they renew the accounts but the other part of the commission is other objectives that help make customers successful so we actually compensate our csms not just on renewals but also on uh methods techniques programs that make customers successful that can be broadly applicable give me an example of those so for example we had an initiative recently with a customer where there was a particular topic around code review that they really wanted to build like a template around they said we want to be able to template this into all of our teams and so our customer success manager was responsible for building out that code review best practices program and then rolling out within their customer but then marketing that to all customers so that any customer that was interested in that program could could enable it within their work and so the successful delivery of that program is part of the objectives and that it gives them a non-monetary pure customer success driven objective that um really can can both align the incentives right because the customer success team has to be aligned to the to the success of the customer right it's in the main and you don't want just the revenue to become combative to the success of the customer so we want we want to be able to incentivize them to make the customer successful and drive revenue but not at the expense so what portion of a csm salary at all stacks is basically something they have to earn its bonus in other words if i'm gonna make i'm gonna make this a hundred thousand bucks there in raleigh or austin to be a csm rep what what can i earn on top of that if i hit all these targets renewals these techniques programs yeah it depends depends on the seniority of the person but you know could be twenty percent could be forty percent could be fifty percent uh so definitely a percentage but not like a sales rep not where you're like going to build your base yeah you're not gonna double your base we wanna compensate you appropriately so that the success of the customer is paramount right interesting and how many humans are to your using your word across 45 customers how many humans do you have across us that you have to manage with these csm reps yeah so it's it's actually a really interesting question so from the perspective of contributors right people generating platform uh data it's over a quarter million but from the perspective of actual users of the application um you know we're in the kind of hundreds of out of thousands okay interesting uh what's it called like eight nine hundred today so hold on what's it because obviously you don't charge all quarter all 250 000 400 bucks a year right yeah yeah so it's it's based on the um the people who are consuming the data versus the people who are generating the data oh got it so quarter million consuming 900-ish generating uh the other way the other way quarter million uh generating 900 ish consuming okay but you only and you only what do you bill against you don't bill against a quarter million do you we don't bill against a quarter million we bill against the addressable part of the organization so we usually have more data than we're we're billing for because the way the systems work is we acquire the data and then the users are only working with a subset of the data but because we're a data platform um you know we're incentivized to work with as broad with footprints i see i see what's the total team size today uh my team yeah we're uh thirty one thirty okay so you guys are growing growing nicely and then look can i do backwards math here 45 customers at a thousand dollar monthly rpoo i think this is probably too low by the way you guys are doing like 45 50 000 a month right now in revenue a little bit higher where um we are we've crossed a million uh rats 83 grand a month that's exciting yeah across a million at the end of q3 we're doing um we're doing about one five at the end of q4 um that's great so that'll be a 4x on the year well not just that but in the last quarter i mean you've grown 33 that's incredible where's that growth coming from is it expansion or new customer editions wow that's impressive growth so round out the funding situation where so like a million on a four-ish back in 2018 and then what you did 4.7 in 2019 so that was rolled into the the million was rolled into the 4-7 so the 4-7 was um the uh the total equity i see i see that was a seed what do you call that we call that our seed seed okay and then fast forward to just i think this year right you rate what you raised four million five million yeah we call that our c2 of 4 million what the hell what is a seed to come on yeah it's uh it's uh 90s eight that's hysterical okay c c two round uh you raised the four again most people in that round are selling like ten to fifteen percent maybe twenty percent of the business were you sort of in that average or did you do something super unique um just straight in that average basically we're from uh from a terms perspective we try to be as vanilla as possible not doing anything anything crazy um and then you know we're gonna go for a the the proper series a and q one yep yep yep got it so you said we're talking like sort of like a four on a 35 40 million dollar evaluation that sort of range why q1 what do you think you have to hit and to do a competitive you know series and q1 i think we want to have our best foot forward we have a lot of capital in place what we're seeing is that the market so just giving an example the market is blowing up all the analysts are writing about us we're getting written up in forrester and gartner and gigo you know all those all those guys our inbound pipeline went from zero to about 40 percent of our pipeline in one quarter we're you know coming into competitive deals and winning them we're seeing that we don't have to educate the customer on the market and the problem anymore you know they know what they they know they need something they have budgets they have mandates to buy all that to say that we see receptivity to the dollars that we can spend which in previous years you know we were still building the category building the market now the market's ready to receive the money and it's time to go put some fuel on the fire and where if you're at about a hundred thousand dollars a month right now on revenue where were you exactly a year ago we were uh about 450k a year ago yeah so you're talking that would be about thirty thirty six thousand dollars a month in revenue so three x year year growth that's a great growth rate man very very exciting stuff thanks for making time for me let's wrap up here with the famous five number one favorite business book uh boys in the boat it's not a business book but i think it's absolutely applicable to business and team formation and team building number two hersh is there a ceo you're following or studying [Music] you know i shy away from celebrity ceos um you know obviously i read about them and everything there's a couple people in town that i look at as like pragmatic leaders that i really admire um there's uh bill scroll runs a company called global data consortium jason massey runs a company fund industrial.io um those two people have been mentors in mind for for years and um and and friends and so i i keep them in mind quite a bit number three what's your favorite online tool besides your own for building all stacks um one thing that i've really gotten to enjoy of late is uh figma yep that's a big one number four how many hours i sleep to get every night six to eight okay and situation married single kids married two dogs no kids no kiddos how old are you hersh 34 34. last question something you wishing you when you were 20 uh i wish that i knew that everything was going to be totally fine guys all stacks there you have it 2018 launch to help you measure your development success velocity status points etc they're doing about thirty thousand dollars a month a year ago now doing about 110 000 a month incredible growth rate just did their seed to raise about four million bucks it caught like a 30 to 40 million valuation ramping up their team 31 between austin raleigh hoping to get you know a proper series a done and maybe q1 next year but meantime again 45 enterprise customers continue to scale using the tool to measure their development teams and the attribution there hirsch thanks for taking us to the top thanks nathan really nice to meet you one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away 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