How Appbuddy CEO Marc Aubin grew to $5.5M revenue and 550 customers in 2018.

hello everyone my guest today is mark alban he is the founder of a company called uh app buddy which helps simplifies complex crm processes all right mark are you ready to take us to the top yeah sure thing all right so tell us more about the company what do you guys focus on what are you doing what's your revenue model is that a pure sas play yeah it is a pure sas place so basically what we do is we help people manage a lot of data and enterprise systems where it's very difficult to do today so we've kind of taken reporting and data management merged into one thing one single user experience where people can edit very complex use cases all from one screen so we are a sas model we're per user per month we typically do annual contracts and we have a good swath of enterprise customers that uh work with us as well as small and mid-market customers if it sounds like you have obviously many different courses a customer share if i forced you though into an average what would you say kind of the average acv is across one of your customers um i prefer to kind of keep uh numbers not not necessarily i wouldn't really want to say anything about numbers specifically but uh we've got a pretty good average acv it's been doubling uh year over year for the enterprise segment yeah mark sorry just give me like a i'm trying to understand it's like 10 we're talking 10 bucks a year or 10 granny or 10 million a year just give me a general range that you're comfortable with uh we we definitely do uh five six six figure deals okay got it so you're at the point you're at the point where you're leveraging kind of an inside sales team at that scale then yeah we do have an inside sales team uh we also have uh a growing and more robust partner channel okay got it very good and put this on a timeline for me when did you launch the company uh 2009 we launched the product actually on the app exchange in 2010 uh salesforce yeah yeah yep so uh recently we actually got on the sap app center and started supporting um multiple platforms with our new product appbuddy cloud but grid buddy started in 2010. is the is the oracle kind of integration performing the same as or sorry the sap integration performing the same as you saw the salesforce integration perform in the early days uh as far as uh business-wise you mean well i mean in terms of you getting new customers from the channel uh i would say the salesforce channel is a lot better right so the problem with the sap accus sap app ecosystem is that they're not necessarily socialized to be an app ecosystem as much as sales forces salesforce has done a really good job uh socializing their customers that hey we have this platform but then you can tack on apps very easily on top of that and unfortunately i think the sap mindset is a lot more it's a lot more hey if i if i want to do some customization i'm going to engage in a two-year project that's just uh even for their sas products their customers are still thinking that way and get us in your brain a little bit what were you doing in 2009 where you said okay now is the right time for me to kind of go all in on this new idea yeah sure so um actually uh i'll even go further back than that okay uh so me and the co-founder uh leia pacquiao we actually uh helped to co-found a business in 2002 which was an app builder uh pretty similar to what we're doing right now we tried to bootstrap that company made a lot of mistakes you learn a lot from mistakes you make and uh one of the things that we saw after with that turned into a consulting company so i was consulting for the likes of um some salesforce consulting companies like some boutique consulting companies as well as uh bluewolf and and whatnot and um i was also working inside uh i worked inside salesforce itself as uh part of that consulting company as well and just worked on a lot of salesforce instances because i started picking up a salesforce consulting um after we became a consulting company and saw that the paradigm that we uh created back in our original company was actually um really useful but we needed to revise certain things for instance we were in that original company trying to get people to do their own a brand new system of record well a lot of people already have salesforce in order to have their system a record so our approach with that buddy was really just to be a thin layer on top of what they're already doing today i see and you um you now have obviously multiple product lines grid buddy for salesforce app buddy for sap but then you have kind of four i believe four different kind of solutions you layer on top of those do all the each of those four solutions layer on both of those two key products yeah yeah they're they're basically uh use cases for those products and we have some out of the box templates they get you going so any any fast growing sas company right you can't get to net negative revenue churn or sorry or net retention higher than 100 without some kind of upsells or pricing axes is it fair to say that your inside sales team are really using these four products to drive expansion and that's where most your expansion is coming from well they are using actually the single product to drive expansion some of those additional temp it's not we we have two products and then those additional use cases that you're seeing on our website are templates on top of those two products right uh primarily grid buddy is our best-selling one so what they're doing is they're saying pipeline management now you perhaps have a service use case that you can also use this for as well sometimes we have out-of-the-box templates that uh fulfill those additional use cases sometimes we don't and in those cases it's just as easy to customize our uh core product for the use cases where we don't have templates but just to be clear though if people are only driving if your inside sales team is only driving expansion based off those two key things let's use grid buddy for example what are the axes they use to drive up acv on that is it like a number of seats and then additional features and then some data metric what are the pricing axes if they're not selling those four additional modules on top yeah it's usually number of seats so that basically we're just getting more seats uh so we allow you in most cases we allow you to do unlimited grids so that encourages adoption and that's where people start to say hey i want to use it for this group or this group sometimes those those expansions a lot of times the expansions actually happen within the same use case but people are actually rolling out to different geographies so we have some uh customers who are multinational and they have a bunch of different groups they're rolling out us out to yeah so what do you what do you model i think you said this earlier but i missed it what do you model kind of year one to year two expansion at are they typically doubling in the first two years or tripling or less um you mean as far as uh we're tripling arr we're definitely not true yeah no that's not no no my question was expect expansion on a customer typically it really depends i mean we have individual account plans and we at the beginning we suss out the uh the expansion opportunity of course at the highest level that's driven by the amount of licenses they have in the core platform we support either sap or salesforce and then uh start to map out how those uh licenses are utilized across the account and whether they're a good match for our app or not because not 100 of the salesforce users are necessarily going to be a really good fit for app buddy who's responsible on your team in terms of the title for driving expansion does the ae stay with the account post sale or do you have a customer success team that handles expansion we do have a dedicated customer success team that handles expansion we we really believe in investing in customer success and has definitely paid dividends for us but when the expansion uh becomes a new opportunity the ae comes back into the account when does expansion become a new opportunity when we've qualified it according to uh what we need to say it's an opportunity so there's a project involved there's a certain amount of users we have budget we have authority there's a compelling event and timeline so basically uh those are our baseline qualification uh criteria in order to become an opportunity there's a lot of folks trying to trying to figure out whether cs folks that are really responsible for expansion and usage and adoption should also be quota carrying some people make them quota caring some people don't they just give bonuses based off expansion how do you handle incentive like incentivization around the kind of the cs role our main incentive is uh retention right for the cs world we don't actually uh make our cs roles quota carrying um we feel that we really first and foremost want the cs role to be um a trusted contact for the account that uh where they feel like they can give them both the good news and the bad news right because actually bad news is actually really good for us because what we do is we have a very tight integration between our cs team and our product team to go back to the product and actually uh make improvements to save accounts and then several cases we've actually done that there's a bonus that uh you know our bonuses and our incentives actually um are somewhat dependent on uh sales company-wide because there's a there's a component where the entire company needs to be successful in order for say that percentage of the bonus it's based on that to to actually kick in but by and large as far as what we put on our cs teams uh incentive it's all about retention yep and what is it what is the total team size today uh cs team total size is uh four okay i meant total the whole team oh actually the whole team so we're around 30 something people okay okay so good you got more than ten percent focused on cs specifically what about account executives uh account executives we have three okay good team is tennis and one of the cs team people he's actually the lead so he's in in charge also in pre-sales so okay and is everyone based out there in california are you guys spread out nope we're spread out we got a couple people in uh the denver area um we got uh for the aes we have one in indianapolis we have uh our marketing uh some of our marketing folks i know we didn't cover that but they're in phoenix so yeah we've definitely adopted a geographically dispersed model that's good a little more freedom yeah and hiring in the bay area is uh competitive it's very tough yeah okay so oh nine you launch uh what have you scaled today in terms of total customers using the platform uh we're about um five close to 550. okay good good news this is very much kind of like you know you at that level you can afford to kind of be high touch really nurture nature on board versus having you know 50 000 customers at a much lower rpoo yeah that that said we do um actually tier our customers because the the uh the enterprise customers the if we gave them if we gave all of our customers the same amount of high touch that we give some of our enterprise customers it's just not scalable so we do have some one-to-many programs that we uh that we institute yeah that makes sense um talk to me about funding i assume you've probably raised just considering your geography how much have you raised uh we have a total of 4.6 million uh both debt and equity financing how much is just pure equity uh three three okay interesting so i want to touch on two things there would it have been possible for you to do this bootstrapped i mean or did you really feel the pressure you really had to raise no we i mean we were bootstrapped all the way through 2017. so you just recently raised we just recently raised on both fronts so we took it we initially took in some debt financing in order to actually scale the way that we did i think i mean we made the decision that we needed to raise and uh also in order to launch the second product the aparti cloud product that was uh that was another driver behind uh raising money so just speak there you did the do you did the 1.6 in debt or the 1.3 whatever yeah 1.6 in debt before the 3 million equity nope we've actually um yeah we actually started with a small amount of debt and then uh we take our debt through lighter capital yeah i highly recommend them they're great um and we just do individual tranches uh when we need them and we've done that over a period of time since we started and then the three million was all one shot we got that in january 18. that's good and what you know there's a lot of firms out there i know lighter i know that guy's there well there's obviously sas capital timmy a hercules a ton why'd you decide to work with lighter uh number one they're just really great guys uh you know when you're talking about finding a funding partner whether it's a debt financing partner or an institutional financing partner it's just really you have to uh you have to work well with them right the models on all the revenue based we were looking at sort of a revenue based financing model when we first started uh to look for debt um i would say that there are other for our size company now there are actually other um facilities out there but still and we actually explored them um even at later stages but the thing about lighter is that they're just so darn cool to work with and they're uh they find something that they ended up finding something that was always appropriate for us every time we uh wanted to take uh another tranche or have different uh we had different requirements yeah now are you still in a revenue-based kind of finance that you're paying back as a percentage of gross receipts per month uh i can't disclose that okay i mean look i know they've come on the show many times they have many other portfolio companies come on the show i have never seen them do something that is not revenue-based financing so that's that's why that's why i'm curious yeah then i guess that's the answer to the question okay yes by the way that's like i mean i don't know i don't know why you keep that i'm not trying to be coy but like i do i take my non-disclosure agreements very very seriously yeah yeah i mean that's i mean it's on their website that's what they do right they don't do term loans typically that ends up with an svb on the back of a vc round and things like that so i mean that's why i'm asking i am curious once you raised vc uh a lot of people would argue like an svb the the interest rate is significantly lower uh effective interest rate relative to like a lighter you chose to stick with lighter which is great did you compare the term loan option after the vc raise and if so why'd you stick with lighter um we did compare the term loan uh option now after the vc raise and there was just a lot of moving parts that made us decide that we wanted to stick with lighter right now yeah you're talking warrants covenants just other things that added complexity to the deal yeah there's those and then also just the team that uh you work with and um uh also just what our capital requirements were yeah no that all makes that makes good sense um very good okay so raise just recently three million equity another one six and kind of venture that's great and then kind of growth year over year what are you guys at now um where again nathan i i don't want to keep on uh asking about like uh um you know specific numbers because i don't want to give you specific numbers but we're definitely in a i'm going at a good clip right now yeah you can by the way you can give me a range i'm just i'm just generally trying to understand are you talking like 10 percent or 100 year over year and any range you want to give is fine to be vague uh south of 100 and north of 10 that's okay that's fine i totally understand that um by the way i always wonder i mean did you listen to any other episodes before you came on i did okay yeah so you kind of knew you're getting into well why agree to come on at all when you know what like the format is uh well i emailed you like right before and told you that i wasn't going to give you any numbers yeah i thought what we were going to talk about too is also just like some motivations for uh got into this business some other things about how we were going to be successful and um yeah i felt like our email exchange before was uh was pretty clear um sorry if this doesn't meet your expectations no not at all i mean let's talk about that i asked about note9 that was my first question about where your head was and i think you gave a good answer and you gave us a lot of history there so i think we did cover that uh let's talk more let's talk more about where you see the space going so what's going to drive future growth yeah we really really feel great about partnerships uh one thing that's been really great is that we've not only been seeing an uptick in our ssi partnerships but also with our oem partnerships so a great thing about appbuddy is that it can tack on to almost any category application and we've seen success with these oem partnerships as a total testimony to that are they helping keep kind of retention super high or vice versa churn super low how are you thinking about i mean sas companies obviously you have to keep churn and check how are you doing that yeah i mean uh with those partnerships specifically i mean there's always the risk that um that is out of your control uh we just tightly work with our partners to kind of uh forecast that correctly and um you know the partners that we have uh uh done these oem agreements with actually one of them already did a renewal for the the um the exact same um level that they were at the previous year so uh that is a success factor right there but um actually it ends up being some of the most predictable uh revenue that we have um because of the partners we're partnered with they're just really really strong so we actually evaluate them as much as they evaluate us yeah the the any additional complexity out in business in terms of product lines means you have to kind of refactor and rethink about what do i have to a customer that comes to this channel what do i have to get them to do in the first seven days to make them like super sticky and then usually there's obviously like a swat team that goes in and drives that behavior on every channel have you been able to normalize where it's actually the same thing on every channel or do you have complexity there where it's actually a different agenda on every channel there's definitely complexity and actually we get in before the deal is signed so uh our pre-sales team is pretty much second to none and a lot of in a lot of cases the use case is almost completely configured before we actually hit day one of the subscription so um so implementation time ends up being like even shorter but yeah we we really have to ensure the success of that initial implementation make sure it's as fast as possible and make sure that people are adopting as well as possible and that's when our customer success team gets on the phone within that first week and has a kickoff call and really starts to go through at that point it is a repeatable process where after we sign the deal where our customer success team has a cadence that they uh schedule with customer within the first three months for us the first three months is really the most crucial yep and then obviously you know i want to get your head here last question on economics how aggressive do you like to be just as a ceo it's really a personal preference thing when it comes to payback period you mentioned you're going after kind of five and six figure deals are you willing to spend up to that same amount or first year acb to grab that account in the first place we like to get below 12 months revenue payback period okay sure are you still working to get lower than that or is that about where you're at right now uh we're looking to get always improve that okay sure got it fair enough all right let's wrap up here mark with the famous five number one what's your favorite business book um there's an old school one i really love uh crossing the chasm yeah jeffrey moore that's a good one uh number two is there a ceo you're following or starting that the rest of us might not know about uh ceo that i'm fond of that the rest of you guys might not know about i don't know the answer to that question okay uh number three what's your favorite online tool for building the business for building the business meaning like operations and whatnot yeah the tool you use the most on a daily basis that has to do with you building the business uh i usually use or i personally use aurora the most okay number four how many hours of sleep do you get every night seven to eight okay that's pretty healthy and what's your situation married single kiddos sing single no kids just a dog just a dog that's good and how old are you uh 47 47 last question what do you wish your 20 year old self knew uh to read more read more guys there you have it from mark buddy launched back in 2009 have two key products uh they're scaling nicely 550 customers right now uh crm kind of workflows integrations making everything more efficient again 550 customers paying anywhere between five and six figures per year in terms of acv growing between 10 and 100 percent year over year they've just raised three million bucks in equity another 1.6 in venture debt from lighter capital again scaling nicely with their team of 30 in remote locations as they look to acquire new customers and optimize for a 12-month payback period mark thanks for taking us to the top hey nathan thanks so much appreciate it