Brightpearl Revenue, Valuation & Funding (2021)

Introduction hello everyone my guest today is derek o'carroll he's building brightpearl which he joined three years ago he took on the biggest risk any ceo could take a turnaround and not a pretty turnaround a big turnaround since taking the homeless ceo he's led the retail operations platform from stagnant growth to more than 12 million dollars in revenue nearly 1400 customers worldwide and managing more than three billion dollars in orders derek you ready to take to the top i am but all that data that you just gave me is from a number of years ago so here's why it's our own here's why i read it i'm setting you up to undersell over deliver so so where are you so so where are you now today Monthly recurring revenue uh we're at 18 million dollars in our we're at just over 850 customers but i'll explain why we've got less customers now and we're clipping along at about 40 percent our growth per annum um and we expect to be at 25 this year um and all of the median indicators from a sas business of good health and unit economics are there so it sounds like you've gone through some sort of motion of churning off smaller rpu accounts and going enterprise which is why customer accounts gone down walk me through the actual product what are you upselling enterprise accounts to drive expansion revenue okay so selling to larger customers the exact same product but it's been conditioned to be able to support much much larger volume so we invested in infrastructure security and customer success to be able to handle much higher volume so in the main the product is pretty much the same as it was three years ago with some areas of innovation in particular around automation and native connectors to platforms like shopify and through that route we were able to generate a lot more value to the customer and drive aov over the four year period i've been here at aop has gone up 588 and it's now at 38 000 per year on a per account basis that's subs only not implementation how do you measure aov is that just on the sign up or is that an average over like what you upsell them over the whole first year period no it's just on the sign up it's average order value for a new contract so it's new contract value in other parliaments and it subs only so no ps so average professional services for implementation is about uh eighteen thousand dollars per per new customer around eighteen billable days yep uh and customers go live uh we're clipping along at about 110 days in the last 12 months in the last 12 month period and that's calendar days so that's from when you sign so when you go live uh which in comparison to the sort of legacy erp systems like sap or netsuite uh they're typically about a year or year and a half derek a lot of entrepreneurs are singing right now are going i'd love to do professional services i'd love to do a setup feed but my vcs won't let me they don't like the low margin profile of professional services you've done it it's working what advice do you have for them well um at the end of the day we're in b2b software so it's complex by its nature and it's people and software and you need individuals who've got expertise to bring people along the journey if you don't you don't get people up and up and running and i think the the key number that we look at is pre live and post live churn if you don't get professional services right you see pre-life churn spike which obviously impacts your universal turn and then post live turn you want to drive down below ten percent and get to sort of four percent and be super sticky and that's why professional services and the customer success journey host signature is so so important so if you look at it in a just individual scope of ps and it's not margin rich you're actually missing the wider picture so you've got to think end-to-end when we spoke back in 2018 you articulated that gross churn annually on a revenue basis was about 13 but expansion was 15. so you had above 100 net dollar retention where is that today we're at still 13 churn and dror is at 102 i've never so it's the same i've never heard that what did you say dollar retained revenue it's the same number it's sort of how much we're selling on top of what we had last year um and when you look at that 13 churn about four points of that four percent over sorry five percent of that is coming from what we call failed implementation so customers that go off um go off spec have issues have people churn um underestimate training requirements whatever it is and then they get to the 12-month cycle and they don't want to repay again so that's what pre-lab tournaments and then sorry i i cut you off so the net dollar retention number your drr is is 102. yeah it's 102 i mean so is there a path to drive that up is that initiative for 21 how do you get up to like 110 120 so over the last three years we've put in place utility-based pricing um which essentially links our customers to number of orders and their gross gmb gross merchandising volume that they put through the platform and as they grow they pay per less per unit but they pay more as they grow and what we then follow that through was a program of improvements around contracts and then account managers and customer success and then we put in place the the basics of best practice that would be preached by companies like gainsight so really putting in place the checks and balances in a calendar to make sure our teams take pass value delivered credit from the customer and then point them towards mid contract upgrade or upsell to new products so our d or is being driven hugely by upgrades in plans because our customers are getting bigger on the platform and the number that sort of cites that which gives us confidence for the future is in 2019 we processed um three billion dollars of orders through the platform in 2020 that went up to 4.4 billion dollars so that's that gives us lots of headroom so if you think of rr and your recurring revenue as a percentage of the total gmb through the platform we've got lots of headroom now to chase through and more importantly the contracts are in place the teams are in place customers aren't surprised when you let them know hey congratulations you've grown here's your new plan yeah on a weighted average cost doesn't work does it does on a weighted average across the full customer base and 4.4 billion dollars of gmv process last year about what percent of that do you take uh we take uh at the moment i think we're at well we're at the moment we're seven point eight percent i believe yep uh i haven't actually looked at that but yeah it's about point seven point eight it's a movie it's a moving feast and we've obviously got to take into account discount claw back as well when you're getting into the first year and the deals that are done by sales people there but i think we're at about point seven point eight percent and sorry that's probably a bad question i asked you because it's hard to sort of calculate that average of some people paying more some people paying less based off volume so better question might have been in 2020 when you'll get your total revenue what percent came from us the flat sas fee versus the gmb percent i don't have that figure i'm not sure okay i'm not sure i don't have that figure yeah i mean this is an interesting trend we're seeing right in sas companies some of the higher valued sas companies right now we call sas plus have this combined model and one of the things i'm curious about is which is actually driving more growth for the percent of gmb model or the you know the sas phoenix and traditional expansion model so i'm just i'm just looking into it now as we speak just on the scorecard and expansion in the quarter so this is this quarter is running at 140 percent so that's a good indicator for um and that's growth this quarter over last quarter and then if i look at the plan for the for the year so we've got 25 million of our to get to uh in terms of total r um so i've got to add 7.2 million of net r at the end of the year by the end of this year of which um 2.2 million will come from expansion um so it's it's very very important for us um and it's a key area of investment so when we when our head of revenue nick shaw comes to us and say i want to invest in more sales people more cs people um we typically are looking very very closely now at more cs people in other words the retention and the upgrade and expansion because it's a lot more cost efficient to go after a dollar there but obviously we're growing and investing heavily in the in the new business teams as well and to hit that 7.2 million in net new target right 2.2 million is going to be expansion how much do you think your processing volume will hit in 2021 we we think well it's growing it grew last year which is quite exceptional just over 60 percent or sorry 58 i think it was um and we expect this year to sort of normalize a little bit down to about 40 growth we expect this year so 5.2 5.3 billion something like that about that but that's on the we are assuming and planning that um the um lockdown that's in place in the markets that we operate in will start easing around sort of july august but see that's uh because because the lockdown has driven a lot more growth yeah and what we've i've got a lot of customers who are traditional merchants they were doing really well on online maybe using platforms like magento they got hit by cove but they shut down stores they literally repackaged their business to go 100 online they got rid of magento they moved on to shopify and now they're growing like uh like guns but completely different cost space and as a result very very different businesses so it's been quite interesting to see that transformation in the market in the last year derek let's go back to those cs folks and how you're thinking about expansion are you putting quota targets to cs reps yes so they have um they have two buckets they have a in the territory that they run or the named accounts that they run we have cs reps split into two we have technical account managers that are all around adoption and then we have account managers that are all about contract renewal negotiation pass value delivered so they're the two roles and um both of them have a commission plan which is based on uh churn because they've got a goal of getting you know retention goal and then a dollar retained revenue figure to get to so so we give them two bucket plans and then we allow them with management to uh navigate the nuances that occur on on a per account basis but they don't they don't have a hard number to get to yeah um we haven't done that because i tried that in the past and it resulted in some behaviors that were not opportune yeah the cs rep focusing too much on selling basically correct and then they make decisions for the short term and it does not not good outcome for lifetime value yeah okay let's go back to the folks that do carry a quota you i'm sure you have account executives how many quarter carrying rates you have uh we have currently now eight um eight account eight account reps of which four are new um and our ram time for each new rep is six months you know by design because that's how complex the product is um yeah but we've got eight at the moment i would say six are fully ramped because we just just hired two literally in the last two two months um six are deployed in the us based in austin texas and two are in the uk average um uh acv so annual contract value per month that we expect from each individual head is 75k minimum so that's their sort of floor so that's about 900 000 a new er added per year if they're effective at fully ranked about that but when you look at the fully loaded cost of each ae we're running at about 580 you know when you take in count your bdr you're across the pipeline and you look at all of the people that you need to feed in uae because we run a territory model um you know we're stretching for 1.2 although we want everyone to hit the plan and you know go back to their spouse and celebrate success so we've got it at 900 900. um but like 1.2 is where we where we where we want to get to because our margin is an area of improvement as a business now that we're going through this phase um and we're looking for uh you know three to four points improved margin in the next 18 months yeah and that's one of the that's one of the levers that we'll be pulling and more robust discounting control and all of the tightening that you would expect once you get product market clip and derek did i hear you right you said you're all in cost for an a is something like 540 000 a year yeah so that's globalized it goes up and down a little bit with regards to you know the the that's in dollars yeah so it's slightly different cost based in the uk dollars but yeah so that's uh each each ae has a business development rep each ae has an allocation for marketing in terms of the number of leads that are going to come to them um and they'll get them from inbound which is our number one channel they get an allocation from the partner teams because obviously that's a very very healthy contributor of leads and then each ae has to go out there and develop their own leads through their own territory we have we have a territory model in place which we're expanding and then you've got um other costs that are associated with each with each ae so it's really an allocation model from other departments in and it just gives us some we we do that because each terror all territories are not equal so it might have sort of west coast in the us california um that the the the drag along cost there for the ae sort of support with the opportunity that's in market support a much higher quota although we leave it at 900 but we expect a lot more whereas if i go to other places in the us or other places in the uk they're not as rich so we're looking for a different type of unit economic profile from those regions so we might put in less experienced aes into the into the the newer more emerging um uh territories mm-hmm talk to me full team size today how many folks uh we go we're at about 100 we're at 112 as of this morning and we um we're running that sort of sustainable growth profile so what i mean by that is as i said earlier on we're shooting for 40 our growth this year um and we have a plan to get to about 180 people by the end of the year so it's quite it's quite a an aggressive ramp the two main areas of investment are the go to market teams but also engineering um and i'm not necessarily building new features out because we've got a very big platform and going deep and focusing on quality workflow optimization automation and better lowering the cost of integration from other platforms to me um so it's it's it's more of an evolution play now talking about capital before we Raised wrap up here i think you guys did a 23 million round in december is that right 33 million dollars yeah 33. yeah so what's that mean fully raised all in how much of the company raised uh we've raised 71 i think in total since the company was started in 20 sorry 2008 um but since my tenure i essentially relaunched the business in 2017 that brings us to 39 million that's the way i look at it when we print the pres hit the reset button and then yeah so after 33 million last year we reached break even profiles we weren't burning any cash which is a big crap which was huge that was a huge uh goal for us uh to get to and so we're just managing that hence the sustainable growth i could have gone for higher growth but it would have burnt more and i wasn't comfortable with that i didn't want to go back to high burn profile so of the 33 we raised we're going to deploy a third of it into working capital improvement into the business we're going to keep a third of it aside for some acquisitions that we're looking at and we'll keep a third for a rainy day in the bank just uh just to make sure that you know if something really horrible happened we would be able to survive so we're at that point now and um yeah we're in really good shape before we wrap up acquisitions how do you decide who to go after walking through your filtering process yeah so uh the criteria is pretty simple so technical only so companies that have really good product but not necessarily the cost of anything else so engineering teams and looking for a break even profile uh they can't be burning cash uh preferably i'd like pre-configured proof of working with my platform and adding value to the customers and then the last one is um skills i'm looking for people who've got the skills in these acquisitions that i need to execute in the future so i've got that filter i've got about 12 candidates and we're just going through them looking for value and deploying that capital in in a way that um keeps my new investors happy that's great and when you raised 33 million bucks back in december what valuation did you raise at uh pre money 105 when i joined the company was worth eight so i hope you carved out a nice equity slug for yourself when you joined i i i did it was a destruct it was a distressed asset at the time and i put a little bit of money in um but yeah i did two things i got i got a chunk for myself and i made sure there was a chunk of the team the future team so the the first hundred employees are very well represented and uh i'm just on a podcast no i don't want to thank you very much sorry about that no you're good this is great health evaluation put your own money and took care of your team you're doing all the right stuff derek let's uh let's rack up the wrap up here at the famous five number one favorite business book um i don't have one at the moment i'm sorry i i would say one thing i've really got a lot out of mark carney's uh wreath lectures on uh bbc podcast or you know if you just look up wreath uh the wreath lectures mark carney who's the ex-bank of england's governor uh lecturers let's check that out number two is there a ceo you're following or studying uh frank zlotman of snowflake um because he's european he's older than me his average ten years six years and i've been here at breitbart four years but uh his playbook is very interesting so i've been studying him it's fascinating i mean there's this breed of ceo like frank like you where there's a company that's bc back that maybe isn't growing as fast as they need to one of you guys come in right you take it to the moon and hopefully our ipo in two or three years later is that the path you see for by parole yes no we're on it with a hot space and a category that's huge and we've got a really good path and now we've got a partner that can give us fast access to distribution in other words new customers and so yeah we're still independent obviously that was a minority around we did and that was very important for us yeah are you talking about the 33 million you rage was minority yeah yeah number three what's your favorite online tool for building brightpearl well it has to be zoom it's not my favorite but it's the most most i could i wouldn't be here without it so i'm sorry i know that's a boring answer but it's zoom you're good number four how many hours i sleep to eat every night i'm eight to nine i love that and what's your situation derek married single kids uh married two kids one's a teenager 14 the other one's 12 and uh they're loving lockdown not and how old are you i'm 52 52 last question what's something you wish you knew when you were 20. oh my god um i would have loved to really understand at depth the engineering world and in particular how to get visibility uh and understand efficiency levels within engineering i'd love you to do a show about engineering yeah the business i'd love someone to do the other side of the house and really drill in to the nuances around engineering and the tech stack that would be super valuable well watch this derek guys if you're listening right now and you're an engineer i'm not the right host for that show because i don't know the right questions to ask but if you're listening around you're an engineer and you're also entertaining like me right you're fun like me you're good looking like i'm just kidding uh i'll pay you a grand a month to launch this podcast reach out i'll pay a grand a month to launch this podcast for folks like derek in the meantime guys there you have it bright pearl up to 18 million dollars in terms of run rate growing nicely 5.4.4 billion in gmb through the platform last year they continue to scale their team of 112 people 33 million bucks at 133 million bucks raised last year at 108 million free money evaluation derek thanks for taking us to the top always a pleasure nathan cheers 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 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hello everyone my guest today is derek o'carroll he's the ceo of brightpearl a cloud-based erp built solely for retailers and wholesalers he's the co-author of the omni channel survival guide he's recognized as a leading retail expert leading bp that trades 1.8 billion of business globally every year cementing in its position as an invaluable asset for mid-sized merchants seeking a competitive edge derek are you ready to take us to the top i am indeed delighted to be with you nathan all right did i get the kind of function of bright pearl correct why don't you fill in the gaps there and then tell me how you guys make money yeah spot on um as you said we are purpose built for the retail and hotel and wholesale industries and so alternatively those markets would typically go to a generic erp provider like netsuite or microsoft and spend a lot of dollars customizing that platform to their requirements whereas when they come to us we're built solely for that sector and that's pretty much our usp as you said on on the intro in the last 12 months our customers transacted 1.8 billion dollars worth of invoices to cash on the platform and when you translate that to our revenue if i look at say our annual recurring revenue as of this morning were like on the first half so at the end of june uh we're at 11.35 million dollars of annual recurring revenue that's a run rate yes that's annual recurring revenue forward looking though forward-looking though no not not past i know that is that is uh forward-looking for the year like the snapshot is forward-looking yep that's our annual recurring revenue and then new annual contract value accrued if you like or won over the six months that's new business upsell and uplift is about two well it's 2.2 million dollars and then professional services on top because we have to do a lot of work bringing people onto the platform is just over a million bucks um in terms of our size that gives you a size and scale and that's as of the end of june i joined two years ago it's a very different story two years ago because we've been on a mission to um uh reposition the company and put it into a position where it was more viable than it was uh prior to my arrival which we can talk about yeah well just i want to make sure i get got those facts correct and i want to hear more about the back story here at 11 or 12 million dollar run rate today that means you're doing call at 900 or a million bucks a month about in pure play sass you didn't have additional cash on top of that in the form of professional services which doubles as helping you basically cover onboarding costs to make customers sticky correct yeah spot on and then we're running churns about 13 which is pretty high but if you look at last year it was 18 and the year before that it was 20 and that's really down to the fact that we've transitioned away from micro retailers so those retailers that riper was built on if you like the transition that traded less than a million dollars a year and say back in 2016 70 of that revenue stack or the revenue stack then was coming from those micro retailers whereas now only 28 of that uh revenue stack comes from those guys so we've transitioned the business up market over the last two years and we've i can talk about that as well but just to be clear that's 13 is that is that gross revenue turn annually correct yeah okay okay and what's net um i don't have that number okay are you net negative you know what do you mean by net negative your expansion revenue more than outpaces your churn revenue um our expansion revenue outpaces our sorry i don't understand the question upsells across the current customer base are a larger number than last year so i told that's for me that's dollar retained revenue so that's uh at the moment it's just over 100 so it's 102 whereas two years ago it was running about 85 got it so just be clear 100 net revenue retention annually which is the same thing as as negative correct yeah apologies no no everyone everyone it's funny in the sas world you'd think because of how many companies there are there'd be standard metrics but you know everyone measures things a little differently so we're talking the same language i got it um walk me through more the backstory when was the company created and then i guess you came in in 2016. yeah the company was created back in 2008 it was incorporate incorporated by a guy called chris tanner developer um train developer got involved in skateboard set up a business and then quickly ran in as his business scales he ran into challenges in the back office on servicing those online channels back in the day so he had a shop at a warehouse but then he started selling online and he realized there was no solution out there that would bring together all of those mundane tasks automate them and give him visibility across the board and create his accounts on the fly so he set out to build that single solution so that's point of sale it's everything on marketplaces it's their own websites it's payments it's warehousing it's order management and then through to accounting so not not that you want to be entering in all of those data points you want a system that will just create the accounts as you go and then feedback to you information on say fully landed costs on each product in a channel on a specific currency so um that's what he led out to do and he went down the route of self-service so he figured it was a good idea to make that platform available to companies like himself he was pretty small at the time so he really built it for self-service but unfortunately in doing so he assigned himself to a segment which was you know micro retailers have a very high percentage of churn so he grew very quickly and then he ran into that challenge of churn coupled with the innate uh experience that goes along with that in terms of the continual investment on r d i joined i joined um in april 2016 with a simple remit to put in place a more viable business model because back then if i could look at say churn in 2016 it was in the high 20s 27 28 which is obviously not tenable and but what i did see was within the customer base there were some very large customers using the platform but they were paying brightpearl a very small amount of money so the relationship between r and gmv of the customer base was well out of whack it was about 0.23 percent and so we put in place a set of steps to move the company away from micro retailers up to mid market more established robust retailers and as a result our churn has dropped off that's fun to do that's fun to better dollars and that's to help to invest in customer service derek just just to be clear though i want to get some other metrics here so did you come in like with a funding round where you were pl did you replace him what's the company raised to date the company today has raised 45 million dollars since since its inception it's had multiple rounds when i came in um the terms of me joining and what we agree with the board was we would do a down round and we would level set the business based on a true valuation that we thought was more in keeping with the fact that it had high churn and that's not viable so we did a down round and i signed up for certain um milestones and triggers that released some cash and that was used to fund the transition and at the end of that journey we you know cleaned up the cap table made sure that all stakeholders were in a position for equal returns once we scale the business and that's what we've achieved um in the last two years and what are you today what do you get today now in terms of total customers we're 913 customers at the moment so our poo is about well our poo is 12 434 and then average order value of new deals because our hoo is relative to the whole customer base some of which were you know are still small i haven't got rid of them all um average order value of new deals is 27 720 and that's aov as it pertains to subscription that wouldn't include pro serve on top and don't and tell me more about the team size today and how many of them are dedicated to onboarding new customers with that acv yeah so we've got um 84 people in total and the sales team in the us and in the uk is at 12 people but quota carriers within that is five people and what is quota how do you set that so when i started the acv yield per rep so new acv yield per rep was about 19 000 per month we're now we're now up to forty eight thousand dollars per month and what changes what changed that well number one was the fact that we were targeting a different profile a customer two we put in place value-based selling methodology so we we really focused on the soft aspects of the proposition so not just the technology but for example topics like business continuity and ensuring the customers understood during the sales cycle how they are onboarded to this and building efficiency metrics to prove to customers what the benefit of the solution was once you rolled on to the service in terms of better better invoicing time better shipping time so we really focused on proof points value-based selling and then obviously that drove a huge increase in average order value as we targeted more customers and we were only able to target more customers because we already had them in the customer base they were paying us correctly the monetization strategy was based on it was a per user-based license structure when i joined and we moved it to a gmv number of orders whichever is higher because we obviously do retail at wholesale and we did that in january 2017 and we saw our average order value uh increase um hugely it it it it basically jumped by three times um back in 2016 it was 10 900 2017 at the end annually it was twenty four thousand dollars and so far this year were twenty seven thousand dollars and that's again new acv per quota carrying rep per month that's yes yes a acv some people back to your thing aov acv average order value average contract value our contracts are 12 months and people pre-pay on the first year although they can buy a multi-year to get a better discount but yeah that's that's pretty much it and then the yield per the yield per rep i don't have it at the moment for the first half yet but we're expecting to hit 60 65 by um i think at the end of this month but we'll be at 75k definitely by the end of next month that's per month yield per rep or per year or what that's per month per month and what does that mean i haven't heard that term before so it's uh yield per rep so it's a an individual i pay a salary to give them a quota they would bring to me new acv dollars in this in the sense of new contract dollars that will roll up into my subscription um revenue flow and that's what they'll bring me in each month that i would pay commission on and my target is to get to um 90k per month but it's 75 now and then would you is that is that net in other words does that include our salary it's not 75 now i'm aiming for 75. we're at 48 000 and i expect and i expect to finish this month at 60. it's increasing each month and back to your other question the other the other reason why we were able to transition the business was we we we we went out and we during during the analysis of our pricing we needed to understand what was the cost of the alternative and we worked with an agency to go out and blind taste some prospects ideal customer prospects on okay you know what would you pay for these jobs of work if you had a cloud service that would deliver them to you and that really proved to us that we were much more valuable than the team the historical team had actually undertaken and realized once we packaged that up and got that out there we found out that we were in a position to compete with a much bigger larger company a legacy erp provider and by selecting a target for the team to go after it really created that sort of sharp end of the stick everyone went after that competitor and then that really also has driven that differentiation and the value selling that i spoke along so it's important to pick your your target is my point so let me summarize this then i want to move on before you came each quarter carrying rep call at 19 or maybe when you first started 19 grand and new essentially contracts closed per month that's up to 29 now you're aiming it up to 45 and then ultimate goal to get to 75 and 90. so today again if they're at about 45 is that is that then you pay them call it six grand a month salary so actually net net it's called 39 or 38. yeah i just go back to your summary there your your the yield bar head when i joined of acv per rep was nineteen thousand dollars yep now it's 48 000 and we expect it to be 60. do you pay salary then out of that so it's actually a little lower or that's yeah yeah it would it it would be uh salary would come out of that so there's about basic salary be about um five four four five thousand dollars depending upon which country you're looking at whether it's uk or u.s that's good look it's good productivity that's great um walk me through again now that we understand the sales model what's your all in fully weighted cap per new customer i'm sorry you did break up with there nathan i'm just saying now that we understand your sales model in terms of the touch you're putting on these sales what's your fully weighted customer acquisition cost so at the moment we're running at just over four thousand seven hundred dollars on the cac and that's pretty high based on where we've come from and that's really down to the fact that when i look at the way i acquire customers historically brightpearl built its business on inbound which as you guys know is very expensive we activated partners as a channel eight months ago once the aov started getting to a point where it was relevant to the partners we wanted to work with and i'm just about to launch an assertive outbound campaign so identifying my ideal customer profile at scale and then feeding that in looking for triggers or buying signals automatically and then figuring that into the sales team and that's how i'm going to drive down that cac to the target is to get it to about 18 1900 which would be the range for this uh for this segment why do you say that 4700 though is bad if your if your annual monthly payment is called a grand per month and they're paying all cash upfront you're getting paid back immediately already yeah but i've got i've got high costs um when it comes to the so cac is one thing and then cac payback in terms of number of months on the total cost it's it's it to me that's high it should be in 19 i want to get it to about 1900 bucks in order for us to be in pole position what do you say your payback period is today how many months uh we're running at 19 months at the moment where do you get that if your attack is 4700 bucks but people are paying 12 grand a year um they're 12 the 12 grand a year is the a orpu so annual recurring license per customer yep and then and then i've got a cac payback period of 19 months that's what i that's what i track which is cac payback i don't have the cache number in front of me but don't you have to know the cache number to get the cac payback i i do i do but i just don't have that in front of me at the moment so just to be clear though it's not it's 19 months and it needs to be 12 13 months so if you have 19 months with the average contract value of call it 12 grand really you're paying about 19 grand to acquire that customer not 4 700. yes but but my so you're quoting 12 000 that's my rpoo that's my annual recurring per all of the customers but my new customers are much more valuable i've been acquiring much larger customers so my um average order value for new deals is 27 720 at the first half as of end of june last year at the end of the year it was 24 and the year before that it was 10 000. so i've i've still got that legacy if you like that drag on my rpu because of all of those legacy customers well just be careful that would that would make your payback quicker if people are paying more per year of course of course it would yeah but but i'm just saying that today my target is to get and improve the cap payback it's the last thing on the board that we've got to resolve it's too high not nineteen months is too high yeah something we're missing something here so i want to make if 27 grand is what new customers are coming on at and you're saying right now you have a 19 month payback period so that's about a year and a half right so you're spending 27 grand plus another half of 27 grand which means your cac is somewhere right now in the call at 40 grand range not 4 700 yeah no so my cac as it pertains to new customers is probably around twenty six twenty seven thousand dollars whereas the cat when i look at the overall as it pertains to overall customer base um yeah so it's about twenty seven thousand dollars at the moment to acquire a new customer in the in the enterprise space so my mistake yeah and they're signing up for a 27 000 on average per your contract correct uh on average yes on average so that would be a 12 month payback period already right not 19. yeah well that's i'm looking at 19 months so that's what the system's telling me what we got from at the end of june interesting okay well minimum discrepancies here i just want to get inside your head a little bit more um team sizes 84 people where's everybody based um we got about 54 people based in um uh bristol uk which is where the company was formed and then the balance uh well there's 22 people 23 people now in austin texas mainly on the go to market functions but we're changing that and then the rest of our team are in latvia and india as you would expect um and yeah when i joined the company's headquarters in the us was in san francisco that's great and uh tell me real quick about it i moved to austin texas and by the way i'm in austin i love austin so that's great um growth rate right now you said you're about 900 call it a million bucks per month where were you a year ago what were you doing um so end of 2017-10 we were doing 7.7 in 2016. so if we look at annual recurring revenue at the end of 2016 we were 7.7 million and at the end of 2017 we got to 10.164 million so give or take 30 odd points of of growth what do you think you'll finish out here in 2018 we're on track for just over 13 and a half million that's great good growth all right good stuff derek let's wrap up here with the famous five number one what's your favorite business book um my favorite well the art of war number two is there a ceo you're following her studying right now um with a guy called francis d'souzou who i admire a lot at presidency of illumina i used to actually work with him but uh very impressive what he's doing made the shift from software into a cancer research so yeah very impressive guy number three what's your favorite online tool for building a business at the moment i'm into bamboo hr i'm liking the way it allows me to uh set goals manage them get the reports visibility really good uh h or management tool number four how many hours of sleep are you getting every night definitely over eight on average eight good and what's your situation married single kids oh yeah i'm married 16 years two kids lauren oscar 12 and eight that's great and how old are you i'm 50. all right derek last question take us back 30 years what do you wish your 20 year old self knew the importance of managing expectation with ambition everything takes a little bit longer yeah and you always want to shoot for the stars and when you're in this type of business you've got to be very careful of that it can help you and hurt you guys are you haven't managed expectations with ambition you gotta really really pay a close eye to that company was launched in 2008 again bright pearl derek came in two years ago and helped really right size the business they've got 45 million bucks raised not over 900 customers paying over a grand per month so about 950 called a million bucks a month right now in revenue that's up from a run rate in 2017 of about 10.1 million and up in from 2016 where they had a run rate ended with a 7.7 million uh run rate 13 gross revenue churn annually said otherwise 102 net revenue retention alien annually super healthy 84 people based between bristol austin texas latvia and india derek thank you for taking us to the top thank you very much cheers