How Aquicore CEO Logan Soya grew Aquicore to $7M revenue and 700 customers in 2021.

hello everyone my guest today is logan soya he's the founder and ceo of aquacore leading commercial real estate software company with all-in-one asset operations and management platform he's responsible for creating and implementing business strategies managing the company's investments and resources as well as driving aquacore's future innovation and growth with a background in physics technology systems management business he founded aquacore in 2012 on a mission to create a global impact by helping clients connect to and understand their physical world logan you ready to take it to the top let's go for it all right man so what does the company do and are you guys a sas model or what's your business model yeah so aquacore is really enabling all of the owners of real estate especially institutional owners of real estate that own a lot of office buildings or hotels or retail establishments to make sure that their properties are running excellently and so that includes running energy efficiently it includes you know streamlining business workflows and just being able to maximize the profitability of that property the software platform really started as an energy management tool and and so we are a sas product uh with a sas subscription and a sas sales process we have one interesting kind of dynamic where we do have an iot element so there are pieces of hardware that we can uh integrate with and collect data from are you subsidizing that or passing the cost of the customer uh we actually passed the cost to the customer so it's sort of like an upfront setup fee the iot hardware is quite low cost so it's not it's not like a huge expense how low cost like how many do you need for 10 000 square feet yeah so so a good way to think about it is that we typically monitor and implement iot for whole buildings and so you might need a thousand bucks to of set up pd's to get the building running and what is that physical thing like is it a little like can you describe it yeah it's a it's a small box about the size of your iphone okay and it basically is a network connectivity device and it latches on to any existing equipment in the building we mostly connect to existing electric meters or water meter or gas meter but we can connect to anything right air quality sensors building equipment so it's very versatile so a thousand setup fee includes how many of these pieces of hardware usually we can get started with just a couple of them and then five ten client yeah like even less than that two to three and then the client can go grow and add more connectivity as they desire right we don't wanna overwhelm them with this iot thing too really and then loop in the sas aspect now so what's the average customer paying per month for the sas component yeah so typical so our status model is based on a per square foot basis because that's kind of how our clients think um so we're typically charging somewhere between two and four cents a square foot and uh you know for a typical commercial building that you might see in a city skyline that's maybe like five or six k a building uh sort of as a as a basic startup fee uh and then 5k per month sorry logan that's 5k per month no no actually 5k 5 to 7k per year okay 5 000 bucks per year and that 5 000 kind of sweet spot starting acb for you that's a building with about how many square feet uh maybe about 100 000 square feet and we typically are selling not to individual buildings we're typically selling to owners that own multiple buildings so a classic sales process for sas we're looking for an acv of you know 20 to thirty five thousand um buildings that's exactly right yeah okay when did you launch what year 2013 2013 great and then so how many buildings are you in today we are in 700 buildings 150 million square feet oh wow okay so can i take 700 times that 5000 acv you're doing like 290 grand a month right now something like that yes that's correct okay and what's growth look like a year ago what were you doing uh a year ago we were in um i want to say uh 70 90 million square feet so we're almost we're like you know 75 uh year over year something in that range okay so so you're doing maybe about 190 grand about a year ago now 290 something like that that's right that's great is most the growth coming from expanding the footprint of historical customers or adding brand new customers all together so we had a huge push uh two years ago on and you know in a new new logo expansion and so we were getting these what we call proof of value pilots where we would get two or three building batches with new logos last year and this year we've really turned our attention to expanding with those now customers so we have about 90 customers total across the 700 buildings and we're only penetrated 10 or 15 percent in those customers so now now in 2019 the transition is to upsell an expansion and start to grow within those existing customers what are your expansion kind of pricing axes besides just add more square feet are there other things you can upsell across old square feet they already are paying for absolutely yes so the three ways that you can expand is you can add more square feet you can add more uh you can upgrade our licenses from light to pro to enterprise that's like feature upgrades yeah so feature upgrades new business intelligence capabilities um machine learning recommendations that you wouldn't get in the pro version for example um some of those things and those are constantly being refined and thought through uh and then the only other way that you can do it is that if you really want to go deep and you add a bunch of sensors to a single building and those for like really big complicated buildings sometimes we see that okay very good and then insurance critical in any sas company what's your revenue churn look like today really really good so we've actually only turned two customers ever so we're talking about like less than point five percent annual churn okay that's like point five percent revenue churn yeah yep yeah so so so our our as a sas model our our greatest strength is our lack of churn because of the stickiness of our product our greatest challenge is to continually to chip away at the cost of customer acquisition because we're dealing with these large slower type real estate organizations chip away at cac or be more aggressive get more efficient you know i think for us you know we see sort of the typical sales cycle a little bit longer than we'd like for that initial deal size that first deal takes longer than we would like the upsell and the expansion opportunity is fantastic if you will but like once and so the ltv to cac is amazing and all those metrics are great uh but in terms of our ability to really gain a hyper hyper fast velocity you know the that up upfront you know sort of um you know three to six to nine month period of winning the customer in in terms of engagement and endorsing the product takes a little bit longer than we would like that's something that's one year if you're trying to if you're trying to speed that up though your cac would increase you'd put two sales people on it to bring it from nine months to three months or like you'd spend more to close the customer faster so your cac would actually go up if you're trying to decrease the sales cycle i see what you're saying no so i think what i'm trying to get at is i'm looking for a more efficient sales process and so from us from our the way i've kind of thought about it is not necessarily to put more people to the problem to solve for that i think it's it's just about creating more scalable more efficient processes and also improving our marketing efforts to re to lower the awareness barriers what's your fully weighted cack today on a five thousand dollar first-year acv uh i actually don't have those numbers off the top of my head or what's it like a round i think that for for us what we here i can pull it up the reason i'm asking is like i'm and just to the listeners i mean when you have such low churn point five percent revenue churn annually i mean usually what you see a lot of people doing in the sas spaces they'll actually ramp up cac because they're so confident in their lifetime value cohort like they're gonna it's very sticky after they get the physical hardware installed so that's what i'm trying to ask you on logan is again why aren't you being more spending more on cac since you know they're gonna stick yeah good question um i think it's more about just that ever ever present balance between growth rate and burn and sort of the next fundraising round candidly how much have you raised a date so we've raised 16 today okay so not nothing crazy but you're obviously definitely on the vc path yeah absolutely so we closed our a last year we're actually uh continuing to pursue our be as as we speak how much are you hoping to raise in the b about 10 10 and do you mind me asking like don't don't say what you're actually negotiating but in your best kind of case what would pre-money valuation be uh declined to answer sorry man well again don't tell me what you're actually negotiating but in like what would just make you really happy if you actually got it pre-money um i i think i think i think 10 10 times revenue would be amazing i mean like i don't think i'm trying to get super aggressive here yeah yeah so yeah 10 times would be what about 35 million free money on a 10 rate so you'd sell what 20ish percent of the company there you go yeah interesting um very good uh so yeah back to that cat question what's it around um i actually don't have the numbers off the top of my head well talky let's talk through what's your team size look like today so i've got um i've got five full-time fte uh uh account executives yep and sorry what's give me the total team everyone engineers everyone yeah 42 42 okay so five of them are focused on do they have sdrs for hae or what uh i have i have only two sdrs uh servicing five a's okay so about seven people are focused on sales to some degree do you do any direct direct paid stuff um you mean in terms of uh ppc adwords trade shows very little so really most of your cac expenses is tied up in the seven person head count that's correct yeah so you could take total salaries each month divided by obviously new customers per month and kind of back into it that's right yeah what to speed up your sales cycle what do you need to do like where do you think your system's weakest right now um i honestly think that there's a little bit of uh awareness and and uh marketing uh pain in my personal opinion i think there's it would be great to have a little bit more sort of like air support so that coming into the conversation um there's a little bit of awareness of our brand and our reputation i think we've done a lot of really amazing work and we have very strong customer advocates and so refining our sort of outward messaging so that those messages and those case studies are heard more effectively would be great i would say that um i would look for that's number one and then number two i think that right now we are learning how to handle larger portfolio adoption so for example if we get a customer that like it wants us to roll out like 30 40 buildings at a time it's not that we can't do it but i think there are sort of sort of certain customer success and customer enablement processes that need to be refined in order to really just do that amazing in an amazing way so that we can pivot that four or five building you know uh initial contract into sort of the full portfolio right away right and so instead of waiting a whole year right to get the to the portfolio you're only waiting like three months or six months what's it where's the team based today uh mostly based in dc with about six remote employees uh remote sales guys you see in a row and now since you're prepping to raise right now i mean are you back at break even or are you still burning still burning still burnt like aggress like are we talking like aggressively or not aggressive um you know we're talking like um like 100 grand a month or maybe around 250 300 around 300. the reason i'm asking is i always like to know i'm always curious um how much runway ceos are have left in the bank when they say okay i should go start fundraising now and so it sounds like i mean what do you try and optimize that for like six months or something yeah my role of thumb has always been something like you know start to put the the hi how you doing in like the six to eight month range and then the more official thing at around six months yeah yeah yeah so if you're burning call it 200 300 grand a month say you got you know 1.8 2 million cushion in the bank yeah that's good great um you have a lead yet investor on the series b or no yeah we're pretty deep now that's good in terms of conversation so oh good good we'll congrats on that that's great all right let's wrap up with the famous five number one what's your favorite business book um i'm gonna go with the creative curve by allen gannett uh recent recent read and have really enjoyed it that's so funny um i grew up in northern virginia i'm really close with allen so it's nice to hear that you you've jumped in he's a good guy did you did you um did he do a book stop in your guy's office uh he hasn't stopped by the office yet but he did promise me so i'm gonna hold him to that all right very good number two is there a ceo you're following or studying right now um i think that uh i tend to keep close watch of both bezos and musk i'm just always very interested to see their dynamics in terms of their disruptiveness and things of that nature so so i i keep them you know kind of classic number three what's your favorite online tool uh b2b or c b to c is just your favorite online tool for building your company any tool for building my company um man uh i am i'm recently have a warm heart for a tool that i just wrote rolled out called lattice which is sort of a people management tool that helps managers with one-on-ones and updates and stuff like that really cool stuff number four how many hours of sleep to get every night uh about five to six and what's your situation married single kids fiance marriage in september oh good no kids yet no kids yet all right and how old are you i am 34 34. last question what do you wish your 20 year old self knew oh man um just just um want to stick it out uh get to get out there and talk to more people earlier i was a little bit of an introvert in my earlier days and i think if i had done that faster it would have been better guys talked people earlier launched aquacore back in 2013 helping people manage buildings more efficiently especially landlords 700 buildings right now about five grand per building per year so doing about 290 grand per month in revenue that's up from 190 grand a month just a year ago so nice growth they've raised about 16 million dollars burning about 300 grand in cash per month right now 42 people in dc and remote 0.5 revenue churn annually they upsell against square feet license feature licenses or hardware upsells there is an iot component here they don't really measure kind of cac and payback right now it's just it's effective right now looking to raise another 10 million bucks here shortly logan thanks for taking us to the top thank you sir