How Astea CEO David Giannetto grew Astea to $29M revenue and 400 customers in 2019.

hello everyone my guest today is david gionetto he is the ceo of a company called astia international leading sales marketing service for the global leader in field service management mobility software industry as an author of three books a former columnist for us business review and for uh and former emba professor he's a well recognized thought leader on how organizations utilize enterprise level technology and methodologies to drive performance david you ready to take us to the top yeah all right it's nice to see a teacher get out of the get out of the classroom and and into actual execution so this is great tell us about the company what's the stya do and how do you guys make money uh stia is uh in the little talked about multi-billion dollar field service management industry so any company that puts technicians or workers out in the field to fix assets that are in place somewhere you know think of this building i'm sitting in it's the building itself fire life safety all the computer equipment air conditioning heating every single thing around me or around whoever's watching this has to be maintained by somebody and it gets more complex from there it's uh think of your supermarket all the refrigeration all the chillers the front end systems all that has to be maintained that's a multi-billion dollar industry and we make the software that connects that technician to customer service to the warehouse and logistics so that the right person with the right skills shows up at the right place the right time and gives a a really good customer experience and david is your model a sas model as a piece of software it is mostly sas today we still do on-premise uh there are certain regions like japan that still seem to prefer on-premise what's the percent breakdown over the last 12 months if you look at total revenue what percent was pure sas well of new customers i would say 80 85 percent come into us new on sas but the caliber of organizations we work with are large global complex so it takes a number of years for them to convert over to savage well that's that's actually specifically why i asked the question that way so not looking at new but looking at your historical revenues as well what percent is sas versus still on prem uh probably about 50 50 between maintenance and sas okay very good and um are you finding the number one uh kind of leading indicator on if you can get someone to go from on-prem to sas is actually it is location location now what we find is really uh it's really just the culture of that organization have they gotten to a place yet where they're ready to outsource put things in the cloud because it's a fundamental infrastructure change inside of that company but that's what i'm saying are you seeing japanese clients that you have are less likely and less comfortable with cloud versus canadian companies is it location is it really geography dependent at that regional level yes certainly the us and europe are well ahead of japan yeah interesting okay and you mentioned working with kind of enterprise folks here i'm sure you have loads of different codes you're analyzing we don't have time to go down to all of them on average what are one of these customers going to pay you per year for access to your tech well they're going to probably pay a per user per month and that could you know let's say that's 50 to 75 dollars per user per month um and it could scale all the way up to thousands and thousands of users around the planet yeah again so i don't that's actually what i'm asking really is the average size of the account you're working with are we talking a thousand seats usually or 10 000 or million seats usually sure yeah we do break it up into two categories so there's a group of clients that are about 2 000 and then there's a smaller group of clients that probably average in the neighborhood of 500. okay interesting so i mean can i we'll just assume kind of minimum here right so can i assume a 500 kind of person organization with these technicians or whatever going out in the field multiplied by that that you call it 75 bucks per month that's like what a 30 grand month account for you guys yeah something like that you could do that sure okay and just be clear that 75 a month per kind of on field rep they're managing with your software that's monthly not annually well right it's going to be a range yeah it is per user per month rolls up to a three-year contract for us i see what's the cheapest someone can get that seat level down to if they do big volumes with you is like 20 50 something sure uh you're you're gonna drop maybe below 50 if you get thousands of thousands of users now we do have an smb technology that's a little bit different okay very good and put this on a timeline for me when did you guys launch the company wow this is actually a stia's 40th year in business 40. holy now were you there from day one or you brought in more recently no 40 years ago i wasn't even out of school i was about there's no way uh our ceo or founder is still with us um uh i've been with the company three and a half years okay yeah that would have been launched or been 1979 or 1980 right 79 and we we started the sas conversion though about five to six years ago interesting okay and how many customers have you scaled to today well there's probably over 700 license on on the two products yep yep that makes a lot of sense now if i take if i even take the minimum you just gave me the 700 times uh 500 accounts right times 50 a pop there you know so each company basically said could be have 500 seats at 50 bucks a pop that's 25 grand a month times 700 accounts i mean you can do the math or that makes i mean that puts you guys like 17 million bucks a month is that right no no no no 700 customers licensed in the 40 years so you'd have to go back and say what are active customers and we also well of course i mean over 40 years i mean you're counting someone that signed up in 1980 and then churned in 1980 as well yeah so no no somewhere in the in the ballpark of i would think 400 active organizations i see okay so even still though i'm trying to get a sense generally speaking i don't want to pin you down but healthy company right 400 folks paying 25 grand a month that's the 10 million a month business oh yeah obviously we're not there we're about roughly speaking a 29 million company okay fair enough we have two products as well so we have the smb product called field centrics and then we have our enterprise platform yeah okay so 29 million bucks in ar that's about 2.4 million bucks a month and if you have that across 400 customers i mean what is that per customer something like what six grand a month yeah i haven't broken it down that way but so you said two different product lines um is one focused on the on-prem stuff and the other is sas or these are two different things and they each have on-prem and sas components well they're both field service technologies but so the breakdown in service if you really understand service is the complexity of the business do you follow multiple workflows or one workflow and how many additional outside groups of functionality you do you need beside besides the technician just going into the field so our smb product really can scale to thousands and thousands of users but you're following a very simple workflow whereas the enterprise level you have a lot of ability to use low code toolkit to customize it it's very nuanced it's everything from full-blown customer service centers that are outsourced project depot warehouse management it's uh it's an erp level technology i see and if you're at kind of a 29 million dollar ar run rate today obviously including your your on that includes your on prem right one third of that is sas yeah that's total that's total revenue yeah but sorry you said earlier though if it's kind of 50 50 sas versus on-prem right so there's sure so there's three ways we are in revenue yeah uh it would be license sales maintenance that's on-premise model yep and you have sas per user per month and then you have services oh i see okay so of the 29 million in terms of last 12 months revenue you're saying that that those three lines are split about a third a third a third 10 million in each services is a little bit over a third okay but yes roughly do you find good when companies like us everyone from sap down to us we're still in that mode of counting recurrent revenue as a combination of maintenance and sas yeah yeah which but there's nothing wrong with that but question i was going to ask you though do you do you analyze stickiness of the accounts that you've that have spent money with you on professional services and how much more likely you retain someone who also spends money with you to do services work for them well when a when an enterprise adopts our business we run their business we are the mission critical application they have so the lifespan of retention is is over 10 years for our customers they stay with us a very long time it is a it's a very impactful event if they were to switch to a different technology yep and there is a constant feat of services because the platform is really driving change in the organization yeah if it's if it's our smb it's a different relationship they get up and live maybe 60 days there's very little services after that they're just in a pure multi-tenant sas model and and there's not a lot of services have you guys bootstrapped the company or raised uh well it's a long history 40 years yeah we've gone through the conversion of uh of...