How Benevity Reached 450 Enterprise Clients with 120% Net Revenue Retention (Interview with Founder and CEO Bryan de Lottinville)

Introduction and Business Overview

Nathan Latka

00:00Hello, everyone. My guest today is Bryan de Lottinville. He is the CEO of a company called Benevity, the global leader in CSR and employee engagement software. Bryan helps Fortune 1,000 clients reinvent corporate giving programs in a way that provides better social and business returns while simultaneously tackling the biggest struggles in the social impact landscape. Bryan, are you ready to take us to the top?

Bryan de Lottinville

00:20I will take you as high as I can.

00:22How's that?

Nathan Latka

00:22Hey, that works for me. Alright. So for people that don't understand the space, how would you kind of describe the business in a sentence or two and what is your revenue model? How do you support yourself?

Revenue Model and Product Suite

Bryan de Lottinville

00:32So we're probably in the intersection of CSR, HR and brand. So we're trying to help companies engage employees and customers around purpose, meaning and impact. Our business model is is, we kinda have an API suite, so that's slightly separate. But the bulk of our, revenue and business comes from our cloud product, which is an employee giving, volunteering, grants management kind of platform. And, so we have professional services, revenue implementation, managed services fees, subscription revenue based on

01:09eligible employees, and then a pizza slice, transaction processing fee.

Nathan Latka

01:14Okay. And if you look at kind of past, just so can understand the revenue mix, the past twelve months, if we look at your revenue pie is a 100%. What percent was just pure SaaS?

Bryan de Lottinville

01:2550.

Nathan Latka

01:25Okay. So fairly significant.

Bryan de Lottinville

01:27Yeah.

Nathan Latka

01:27That's great. Okay. So with that in mind, let... Let's break down a use... Kind of a use case a little bit more. So is there a company you can talk about that uses you and specifically, can you can you kinda share exactly how they use you?

Microsoft and Apple as Client Examples

Bryan de Lottinville

01:39Sure. We'll we'll pick, maybe the biggest and best program in the world is Microsoft is is a client of ours. So they, they use our SaaS product, and they call it, Microsoft Gibbs or something. So it's kinda white labeled, by different companies. I think the only client that uses it and calls it Benevity is Apple. But, so they would do their employee, giving and volunteering, and and grant making through our platform. And so that they get

02:18a single user experience and coherent reporting across those different sort of budget cycles.

Nathan Latka

02:23Okay. So it's really like a report... This what I'm trying to understand though. Right? So people are listening going away. Why do they need help with that? So really, it's helping identify, giving back opportunities, reporting on what the activities look like, what else?

Bryan de Lottinville

02:36Yeah. So I mean, at its essence, it's it's trying to help companies help people be their best selves and do that through

02:46a democratized user centric approach to searching for and giving to charities of choice with or without corporate matching, searching for volunteering opportunities, those sorts of things.

Nathan Latka

02:58Got it. Is that a time thing or a money thing? They're looking to donate, know, the... At Microsoft, they have to give twenty hours per month or it's a thousand bucks at the end of the year or here's how you can you can donate too?

Bryan de Lottinville

03:07It's time, money, and product. It could be skills based volunteering around board board participation or helping, charitable recipients of their product, giveaways, implement them, those sorts of things.

Nathan Latka

03:21Interesting.

Bryan de Lottinville

03:22Or just paint... Painting a fence. I mean, it it depends on the individual.

Nathan Latka

03:28And give me a sense. I'm sure you have many different customer cohorts, but just for the sake of time, what what would the average kind of logo or brand pay you per year to get this kind of tool? Just the SaaS just the SaaS component.

Average Contract Value and Sales Model

Bryan de Lottinville

03:42On average, it's probably a 100,000 ish.

Nathan Latka

03:48Yep. So does this mean... I mean, the reason I ask, at that price point, you really can put an inside sales team behind it. You can afford to put significant touch on the sale.

Bryan de Lottinville

03:58Yes. I mean, we're we're, unfortunately, I mean, we're we're turning away probably 60 plus percent of our inbounds because they're too small for our deployment model. So it is it is fairly high touch.

Nathan Latka

04:09What's too small for you in terms of team size?

Bryan de Lottinville

04:11Right now, it's anything below 500 employees, but but we tend to focus more on 5,000 and above. Yeah.

Nathan Latka

04:21And put put this story kind of on a timeline for me. When did you launch the company?

Company Timeline and Founding Story

Bryan de Lottinville

04:25We've been around since 2008, spent a couple of years building out the back end and the platform, the receiving entities in the various countries, which is a big part of the moat, if you will, in this space. And then, we built the cloud product in 2011.

04:44And so we're unfettered by revenue for for the first few years. But...

Nathan Latka

04:48So how how did you support yourself? Did you guys raise early on?

Bryan de Lottinville

04:51Yeah. I've been fortunate. Had had a couple of equity... Liquidity events in growth companies. And so I I've I've funded each of the angel rounds in the early days, and we avoided institutional money until our metrics were were pretty compelling.

Funding History: JMI Equity and General Atlantic

Nathan Latka

05:09Yeah. That's that's obviously a nice place to be there. Help me understand though, you know, your own personal capital plus investment dollars. Total capital in the company to date is about what?

Bryan de Lottinville

05:22Not really. We we have a private equity investor that now owns the majority of it and and

Nathan Latka

05:28Oh, okay. When did when did that happen?

Bryan de Lottinville

05:30Well, the first the first firm came in at 2015, a firm called JMI Equity. Last January, General Atlantic, came in meaningfully and and took out most of the original angels and and financed a couple of small acquisitions and set us up to sort of realize the potential of this thing.

Nathan Latka

05:52Besides the acquisitions and paying up the early investors, did any of that money go to the balance sheet or was all really secondary?

Bryan de Lottinville

05:59No. There was some treasury as well.

Nathan Latka

06:01Oh, what does that mean treasury?

Bryan de Lottinville

06:03It went into the company coffers.

Nathan Latka

06:06Oh, got it. Different term. I haven't heard that one before. Very good. Well, look, my my research team based off public filings, I mean, it looks like before this kind of stuff happened about $38,000,000 has gone into the company. I mean, is that is that fairly accurate? Before GA?

Bryan de Lottinville

06:06No. No.

Nathan Latka

06:06With GA and JMI, both those together about 38's gone in.

Bryan de Lottinville

06:06No. No.

06:25Yeah. No. That was the JMI transaction in 2015.

Nathan Latka

06:29Oh, I see. Got it.

Bryan de Lottinville

06:30Yeah. So it it would have been, you know, GA was probably an... A 9 figure investment.

Nathan Latka

06:38Got it. So the GA one was undisclosed. The JMI one was 38 back before that.

Bryan de Lottinville

06:38Yes.

Nathan Latka

06:38Got it. Fair enough. That's great. So help me......

Bryan de Lottinville

06:46Of which was secondary back then as well.

Nathan Latka

06:49Yeah. So help me understand as a founder that's exited a couple companies, you know, we have a lot of we have a lot of founders like you that listen to the show, you know, maybe had a 600, 500, 400, you know, billion dollar exit in the past. How do you decide... You know, many people would say, well, listen, it's great you have your own money, but you shouldn't risk it if you can help it. Right? You're

07:05backable now. So so how did you really... That battle in your head, I mean, how did you say, okay, now is the time to go 38,000,000 from JMI versus keep using your own money and keep building?

Bryan de Lottinville

07:14Well, I mean, for one thing, we're a B Corporation. So the the goal in this was not necessarily

07:24just the rapacious pursuit of another exit and profit. We were really trying to scale this thing to

07:32make doing well by doing good more than a catchy tagline. So that did have some influence on the extent and... Of my willingness to use my own my own funds. And, we had a very supportive angel network of oil and gas folks here in Calgary. And and so we we, we really wanted to wait until the capital was something of a commodity and we could choose the right fit, in terms of the private equity firm around

08:03culture and strategic value and some of those sorts of things.

Nathan Latka

08:06Mhmm.

Bryan de Lottinville

08:06So I'm not sure if that answers the question exactly.

Nathan Latka

08:09No. It does. I think it's fair. I do think I do think B Corps are still kind of sexy and new. For those people that don't understand how they operate, can you give us a quick rundown?

Bryan de Lottinville

08:17Yeah. I mean, the easiest way to think of it is that it's a for profit business that has a social mission baked into its its articles of incorporation so that it's recognizing that as a stakeholder, if you will. And and I actually...

Nathan Latka

08:31Are there tax benefits to that?

Bryan de Lottinville

08:33No. No. There's there's there's no real I I I will besmirch the B Corp people, but there's no there's no... My hope is that

Nathan Latka

08:41at lawyers, you're get lawyers roll around here.

Bryan de Lottinville

08:44At some point, I hope the designation goes away because I believe that all companies can pursue hybrid goals like that without a special designation. But a lot of companies use it for marketing purposes and to point out to the world that they have a sustainability or other sort of social driven agenda.

Nathan Latka

09:05Yep. And and so how effective have you been at kind of installing this agenda across, again, these Fortune 1,000 brands? And maybe said differently, you know, how many customers are you serving today?

Customer Count and Social Impact Metrics

Bryan de Lottinville

09:14Yeah. We have about 450 enterprise clients that the bulk of whom are large companies. There's a few sort of mid market type companies in there. And not all of them use all of our product suites. So we're interested in cross selling and upselling and some of the usual things. But we have... The metrics we track, obviously, in addition to the for profit metrics and revenue and some of those, obvious ones, we track our social impact metrics.

09:43So we will distribute,

09:47around $1,200,000,000 this year to a 150,000 global charities and...

Nathan Latka

09:52That's the money that all the Microsofts and the Apples and everyone are kind of using you to put through to the local communities.

Bryan de Lottinville

09:57Right. And their and their people. So there's typically matching funds and and donation currency incentives for volunteering, those sorts of things.

Nathan Latka

10:04Very cool. You're you're gonna hate the rest of these questions because I'm a total capitalist and I I don't have the wisdom yet or the humbleness to be where you're at. But maybe one day, Bryan, I'll get there. Help me in... From from a from a financial perspective, I mean, can take that 450 times kind of the ACV target you had mentioned earlier of a $100,000 and that would put your, you know, ARR right now at

10:22around $45,000,000. That's just the SaaS revenue. Directionally, is that correct?

Bryan de Lottinville

10:28Directionally, it would be correct. It's it's kind of... Obviously, the average doesn't doesn't work quite that way because we have some large clients that are very large and and some smaller clients that are probably not there. So... But generally speaking, it's it's it's in the right direction.

Nathan Latka

10:44And and based off the current kind of structure of the company, are you coming yourself fund, you do JMI, you do GA, now private equity is involved. What what growth rate are you kind of seeing year over year in terms of your expansion? By the way, another thing I'm curious about is, you could argue if you're turning away customers with less than 500 employees that this is actually a finite market. You can actually measure your market

11:03share.

Growth Rate and Expansion Strategy

Bryan de Lottinville

11:05Yeah. Well, we are we are... Our compound growth rate for the last five years is around 82%. This year we're in the high forties to date. So growing... Still growing nicely.

Nathan Latka

11:23That's great. And and again, how are you getting that growth and also being so selective with clients? Is it really expanding usage across the 450 or is it adding brand new logos altogether?

Bryan de Lottinville

11:35It's mostly adding adding new new clients.

Nathan Latka

11:37Oh, really?

Bryan de Lottinville

11:38The neat thing about this business as a business is is not only do we add clients, but we can grow their programs and improve the participation rates and and the both the social outcomes. And more often than not, as we drive those, we're we're also driving revenue.

Nathan Latka

11:55Mhmm. You you mentioned that you're you're turning away a lot of people. I'd love to understand kinda more about the engine that's attracting people to you. What what does your current team look like, Bryan, total? And how many of them are marketing and sales?

Team Size and Office Locations

Bryan de Lottinville

12:07We are about five five hundred or so folks. Marketing and sales, is still a lever that we are investing in. We we... Our sales team is only about twenty twenty one, think, in the in the in the market. There's, some supporting, you know, solution engineers and BDRs and and folks. Marketing team is is not huge. The the bulk of our people are dev, you know, development, engineering folks and, client success people. So a lot of what

12:45is drive growth is the trend in in this area of moving away from CSR as a kind of a handout sort of a... An approach to one that's, more about engagement and the opportunity to connect people with their desire to to have meaningful...

13:07Employee retention and happiness.

Nathan Latka

13:09Exactly. Yeah. I totally get it.

Bryan de Lottinville

13:11We actually have data now that's supporting the the ROI around that in in... Through the use of our platform.

Nathan Latka

13:17You know, Bryan, us millennials, it's avocado toast and habitat for humanity. That's how it works.

Bryan de Lottinville

13:21Well, you know, it's true. We have... Of those 500, I think 450 or four sixty of them are millennials. So drink our own Kool Aid. And I raise the average age in every room by fifteen or twenty years when I walk in.

Nathan Latka

13:39That's good. They keep you young. Of the 500, are they all... Where are they all based?

Bryan de Lottinville

13:45The bulk of them are in Calgary, Alberta. We have meaningful offices in Toronto, and Victoria, in Canada, and a small office in San Mateo, California, some salespeople scattered about the The US and then a small operation in The UK as well.

Nathan Latka

14:05That's great. Last few questions here as we as we wrap up. Walk me through kind of how aggressive you're thinking about adding kind of new accounts, new customers. And and the way to measure that, obviously, that I'd like to understand is how... You know, your CAC. Right? So if you're signing up a new $100,000 account, are you willing to spend first year ACV or more on getting those guys?

CAC and Inbound Growth Engine

Bryan de Lottinville

14:25Yeah. Our our our CAC is extremely low. So in fact, so much so that that that that private equity guys are are frightened that we're not spending nearly enough money. But...

Nathan Latka

14:38How low are you talking? I mean, like, one month payback kind of thing?

Bryan de Lottinville

14:44Probably in that in that area. It it depends. You you know, we have a lot of word-of-mouth referrals because we've serviced the heck out of, these large companies and and the service bar has been relatively low in in that space. And the ability to to,

15:03provide global capabilities has also been problematic. So so we have both trends and sort of reputational thought leadership things helping helping with our growth. The constraint, is, the configurability of our product because of these... You know, many of these companies, think they're the most important company in the world and many of them in fact are. So so everything we build has to be configurable and yada yada. And and it makes it very difficult to take that

15:33deployment model down market.

Nathan Latka

15:34Yep. And and pretty sticky. What's churn rate look like over the past twelve months?

Churn, Client Retention and Net Revenue Retention

Bryan de Lottinville

15:38Yeah. It's in the 98% range.

Nathan Latka

15:43And 98% revenue retention?

Bryan de Lottinville

15:45Oh, no. Revenue retention is is well north of a 100, but

Nathan Latka

15:49Oh, net net revenue. Sorry. Net revenue would be above a 100, but gross revenue retention is 98?

Bryan de Lottinville

15:55Yes. Yeah. Call it 98, 97.

Nathan Latka

15:59Don't don't let don't let me convince you what your numbers aren't. Is that is that accurate?

Bryan de Lottinville

16:04It's... Well, we we don't we don't we don't measure gross revenue retention. We measure net revenue retention and client retention. So our client retention rate is 98%. Our net revenue retention is a 120 ish.

Nathan Latka

16:23Yep. And where is most of the expansion revenue coming from? Is it just the the Microsoft's adding additional seats because their teams are growing?

Bryan de Lottinville

16:29Well, Microsoft Microsoft's a very big program so that it doesn't necessarily grow as quickly as some of the other cohorts that don't have as mature a program. But most of the growth comes from... In in Microsoft's case, if they buy LinkedIn or something that's adding a bunch of employees. But many companies, it's it's program growth or enabling additional modules that they haven't

16:55enabled before. So Yeah. I would say... And then and then a lot of the growth also comes from as the program grows, the donation volume typically grows and and that drives platform revenue.

Famous Five: Books, Sleep and Personal Life

Nathan Latka

17:07Yep. Bryan, very good. Let's wrap up here with the famous five. Number one, what's your... What was the last business book that you read?

Bryan de Lottinville

17:14The last business book I read was a a little book called The Founder's Mentality by a couple of Bain consulting people.

Nathan Latka

17:14Number...

17:24You say that like it's a bad thing, but you're you're you're part of them now. You're private equity. Right?

Bryan de Lottinville

17:30Well, I was reading it because it it validates many of the things that I think are important as a company scales that we we don't necessarily wanna do.

Nathan Latka

17:30That's good.

17:39Number two, Bryan, is there an under the radar CEO in Canada that you're following or studying?

Bryan de Lottinville

17:48No. No.

Nathan Latka

17:48Number...

17:49That's okay. Number three, what billing system do you guys use?

Bryan de Lottinville

17:56Billing system. We we don't use an external billing system.

Nathan Latka

18:04You built an internal... Well, I guess, you said you've been around a while. You built an internal billing system?

Bryan de Lottinville

18:09Well, we we we use Adaptive and and Intacct as our systems. We're in the process of implementing Workday next year, but, you know, we don't have a separate billing system.

Nathan Latka

18:22Okay. Number four, how many hours of sleep do you get every night?

Bryan de Lottinville

18:26I get

18:29seven to seven and a half.

Nathan Latka

18:31That's that's pretty... Very specific and great.

18:33And what's your situation, Bryan? Married, single kiddos?

Bryan de Lottinville

18:36I am married with a couple of kiddos, one of whom is just 10 years old. So for an old fart, I'm I'm still still in the game.

Nathan Latka

18:44You're still hip and cool. How many kids total?

Bryan de Lottinville

18:48Pardon me?

Nathan Latka

18:49How many kids total?

Bryan de Lottinville

18:50Two.

Nathan Latka

18:51Oh, two. Okay. And Bryan, how old are you? You said 50 what?

Bryan de Lottinville

18:55I am 59.

Nathan Latka

18:5659. Very good. Last question. What do you wish your 20 year old self knew?

Bryan de Lottinville

19:03That entrepreneurs are not necessarily born, they are also made.

Nathan Latka

19:09Guys, entrepreneurs are not born, they can also be made. Founded Benevity as a B Corp many many years... Well, probably transitioned to B Corp, back in 2008, now 500 people again focused on helping big enterprise brands engage their employees and retain their employees by helping them figure out how they can give back, how they can volunteer. Currently, 450 customers were just talking about their SaaS revenue which makes it about 50% of their revenue, but about 450

19:36customers call it a $100,000 ACV on average, but some smaller, some bigger, call it $45,000,000 in ARR. 47% year over year growth, which is obviously healthy. 98% logo retention annually, net revenue retention over a 120% churn. Sorry. CAC super, super low. A lot of their stuff is inbound via their team based in Canada and other remote locations. Bryan, thanks for taking us to the top.

Bryan de Lottinville

19:58No. My pleasure. Continued success.

Nathan Latka

20:02Thank you, sir.