How Cirrus Insight CEO Phil Dixon grew Cirrus Insight to $7.7M revenue and 150K customers in 2018.

hello everybody my guest today is brandon bruce if his name rings a bell it's because he's been on before he is one of the founders of a tool called cirrus insights and at six foot eight he's probably one of the tallest perhaps the tallest founder to be interviewed on the top brand i believe that's true but he's an endurance athlete and world traveler and has built serious insight into a top-ranked productivity platform for gmail and outlook with 150 000 users and over 1 million dollars in monthly recurring revenue brandon are you ready to take us to the top let's do it nathan great to be back with you you bet yeah so last time you were on my gosh i want to say that was 12 to 18 months ago and you were doing at that point you told me about 640 in monthly crank revenue so that's up huh yeah yeah so we're up over a million now which is a great milestone uh for the company and got to be on the ink list uh last it's been an exciting i think the trials enablement space and we're hoping to you know be a driver in that space so during dreamforce salesforce's big conference this year we acquired a small company in sweden called attach that we're really excited about because we had started using it internally and really liked it so it basically enables you to do document management and attachment tracking but the coolest kind of whiz-bang feature of the whole thing is i can send you a slide deck right by a link and then i can watch you view the slide deck in real time and that's just plain cool it's neat to be able to see are your prospects viewing the slide deck at all and if they are what pages are they looking at when do they abandon do they even make it to the pricing slide or some other important slide that you have in there so we were kind of captivated by it and we were you know thrilled to welcome them aboard and join them to our team we'll chat more about attach here in a second but give us some more updates on the business so last time we spoke you were i think you told me each customer's paying about six bucks a month is that still the case or have you driven up the arpu a bit yeah it's got it's up a bit from there should be a higher above eight now as we introduce more plans more bundles so we've been trying to build out more of an all-in-one sales stack right so instead of having to go out and assemble multiple pieces and try to connect them all together and integrate them which we struggle with as a company it's like a full-time job for somebody just to make sure all your tools work together we're trying to build those tools into a core solution so that once you have a crm in place whether that's salesforce or something else then we can be that one additional tool that powers the actual selling activity so everything from prospecting at the top of the funnel so we built some integrations with inside view and full contact and others all the way down to the signing of the contract at the very end which we now use attach for with the hello sign integration and then we cover the meeting scheduling and the email tracking and so on and so forth the drip campaigns through the middle of the of the cycle so we've been focused on that and focused on kind of driving up that rpu as a result of having a more complete stack and how many customers now uh so on the cirrus insight platform it's about 150 000 like you mentioned and then we've picked up certainly additional users from several years ago we acquired assistant.2 which is the calendaring the scheduling service and then most recently attach so when you take those two in addition that puts us up to about a quarter million total users yep two now when you say 150 000 are those paying customers or those are users yeah on the cirrus insight side those are pa paid users got it so about 5 000 companies with about 150 000 total users under those companies and then for the other applications assistant 2 is a free application for gmail and attach also has a free version so most of their user bases respectively are free and are you okay so so that's helpful to understand and real quick before i ask you more questions about how you found attaching how you did that deal um have you raised any additional capital or you're still at half a million uh yeah so originally we had raised half a million from angel investors and then since that time but again this goes back probably three four years we had raised an additional uh 500 to 750 so our total raise all in has been a little over a million since the time we started six years ago but we haven't taken on any additional capital i'd say in the last three years so founding year was you said back in 2011 yeah end of 2011 so we're officially six years in uh four days from now it's crazy right i mean i think uh in many respects we sort of surprised ourselves because software moves so fast i think there's almost an anticipation for many of us that get into software that like hey we'll hit it hard and then two three years from now it will either have not worked or it will have worked really well and we will have done something there'll be some sort of merger or acquisition or some sort of liquidity event and so now we're six years in and we're like okay let's keep uh let's keep plugging away and see what the future holds yeah so so break break down this attach kind of thing for me so first thing i want to ask there's a lot of people listening right now that have companies that are sub you know 100k and monthly recurring revenue who are looking to sell to companies like you how does a ceo like you determine what companies to go out and acquire and how did you land on attach you know for us i think the keys are it's got to be complementary to the existing stack that we've built already so a tool that replicates identically some of what we've already built is probably not going to be attractive but if it fills a gap if it's a missing piece and so we had specked out and even started building how are we going to do attachment tracking and how are we going to do the e-signature at the end when someone sends out a contract and we want all that to be logged into salesforce and tracked but we knew that it was going to take us pretty long time to build it because it's a complex project and so when i looked on the market there were certainly large companies doing this which we can't acquire them we'd more be a target for them um and so we were looking for companies of that fits into that metric right where they reached a certain size they've got a really nice built out product somewhere in the range that you're talking about you know i would say companies that are in you know pre-market so maybe they're at zero all the way up to you know 100k maybe even a bit more than that but that are looking at their options i think you know if it's a company that's just super super fast growing and maybe they're on the verge of raising money or kind of charting their own path then that's probably what they're going to do and i've talked with several of them in in various industries um but if they're looking at the market saying hey we'll be better together we like what serious insight is built we see where where we can all fit together valuations are going to go up for both of us if we combine forces that's a perfect situation so when you have the tough conversation with the attached founders i mean how do you value the company i mean i usually these things they start with a rational conversation about some multiple on either top line or bottom line and then there's the emotional side which is the art and the harder part yeah right i mean there's lots of different factors that that go into it that you can either say oh yeah it's not based on that at all but to your point it's always based on that or some of it right so there's the hey here's what our mrr is but there's also here's what our cash burn is and how long we can stay in business and there's also how much have we raised in total are our investors going to get a return are they going to get their money back uh are they going to take a loss so we had a tax raised capital yeah attach had raised how much passed and so that was a consideration um that's a great question i don't have the number off the top of my head like more than a million uh no no and i think yeah and for viewers that are online right now they might be able to check you might have it in your database or they might have it some of the online but we're not talking like that we're not talking all these companies that has raised like 10 million where the investors want like 100 million or bus kind of deals oh yeah and i think honestly for a company like us that's that's lightly funded in a lot of ways bootstrap that's going to do as we did this acquisition just out of cash um then that would be a very very difficult if not impossible acquisition to do because if venture capital or pe is involved then they're going to want to protect their interests and get paid and there's almost always going to be a pretty big lawyer and cp cpa bill attached to it whereas if it's a small company then you can go in and it still took a lot of work still took a lot of due diligence a lot of lawyer time etc to do the deal but it was possible and that's what's important so can will you share what you paid for attach we can't by the terms of the deal but you know listeners kind of can get the idea of you know what what can a company like us do where we're not applying uh private equity to a deal we didn't go out and source uh ventured debt to do it we just did it because it looked like a very complementary technology with a great team behind it that we wanted to also join with us and so we were able to put a package together that made that made sense for them and and made sense for their investors were they pre-revenue no they have they had uh they have current customers that are paying in so they're making money okay like like more than 100 grand a year or a month or under uh no it would be under okay got it so it's our job now to take it to market and really ramp it because the product is really really solid so when you value a company like this one of the things i believe you do is you put a little pro forma together and you say okay our cross our ability to cross sell this into our current customer race and go from six dollar operas to eight is we're gonna see a ten percent cross sell rate usually you overestimate where you yeah as soon as someone mentions the word synergy yeah you start to get so is it hitting your plan so far or it doesn't always play it well one we're very early so we've just we've just started demoing to our customers because we're the acquisition second or third week of november oh wow yeah we're about two three weeks in so we're we're doing initial integration right with our common platform um but we have started doing dozens and dozens and dozens of demos to our customers and we started getting people picking up a bunch of seats so it's exciting but it's very early in that ramp so in many ways too early to say if we're really quote-unquote hitting plan but i think we'll have a pretty good sense of it you know toward the end of the first quarter of next year if we're doing the deals that we thought we could do and what's the team up to at this point like are you keeping their teams when you're buying these companies or no yes so we brought on uh their team several developers and their ceo have all joined uh serious insight so what's your total team size today uh total team size today is 58 58 folks primarily split between knoxville tennessee where i am in irvine california where ryan is yep interesting so 58 folks total knoxville irvine that's great and now have have your other metrics changed drastically since we last booked like what's churn look like right now annually yeah churn is held relatively stable from last time i will say though that we and i think it's fair to say some of the others in our common market have certainly seen some pressure uh from the sales force yeah so i think you know they've tightened up uh their marketplace the salesforce app exchange which had been in the past a primary vector uh for us to reach out to leads and so forth and they've tightened that up for partners i think it's fair to say like it's more pay-to-play yeah yeah i mean when you look at the folks that are participating in the exchange they tend to be much larger companies that are doing more high-level biz dev type partnerships and less so of the organic rankings driven yeah exactly right it has has less to do with that so so yeah so we're we tend to source just as last time the majority of our deals through word of mouth right even though uh certainly there's no lack of competitors and salesforce has some pretty good offerings in the space we're always going to do better at serving the customers that have you know we'll call it special needs they need the app to function just so and work with the customizations they've made in salesforce and that's what we do very very well it's how we've architected our app but for the long tail that we used to pick up more easily they've got so many options now the the bottom of the market i think it's fair to say has become relatively commoditized yeah so what is your turnout would you say annually um let me see the annual churn on our side is going to be around looks like it's about 15 to 20 percent that's logo or revenue uh that's on revenue okay revenue churn got it and i imagine your logo probably matches that pretty closely yes yes because we in this and we're different from a lot of b2b sas companies in that way i think the average when uh david scott and team came out with their report right where they benchmarked against 400 sas companies the average number of customers in that study was several hundred and and we've got five thousand uh logos so it's safe to say while we have some really big customers we also have a very long tail of freelancers and smb customers out there using the app which we love so it's great stability to have that foundation but we're also susceptible to the higher churn i think than the average what are you paying right now to acquire these guys these new customers so our cost of acquisition has remained relatively stable what we try to do is get it in a range about 100 150 bucks yep on the acquisition side and that way because we don't have a big private equity or venture capital war chest to rely on just for operational cash we want the payback to really be you know within the first year how does that happen though if you spend 150 on them and they're only paying eight bucks a month that'll take you like 19 months to get payback is one of those numbers different yeah i mean that's that's on an average and so that's counting in our all of our historical customers like when we first launched the app six years ago got it those customers were paying 60 bucks a user a year right whereas now if you're signing up from scratch you're going to be a couple hundred bucks i see i see so your your rpu average across your base is eight bucks a month what you're saying are people new that are signing up that you're spending 150 to acquire they're paying more per month so your payback is around a year right exactly yeah payback new customers i see and are you testing like conference spend or like where are you spending uh you know your paid dollars yeah it's a good question historically we've done a ton a ton of conferences so lots of traveling lots of pressing the flash meeting folks on the conference floor which has been great i think toward the end of last year we started to do less of that there seemed to be diminishing returns i think i noticed conference attendance seemed to be going down so i don't know if that was just just symptomatic of the latter half of the year or if we just reached a tipping point where people said hey i've been to enough of the conferences i get it i've heard all that i want to hear and so i'm going to sit this one out so while we're still doing conferences it's safe to say we're doing a lot more uh other types of outreach we're doing more paid spend than we have in the past and we're doing more on the content side right to try to create good uh seo results and attract people into the top of the funnel uh in terms of a conference spend so let's say a conference is right in your target market it's a perfect fit there's a thousand attendees give me i mean what are you paying on average for that kind of placement for like a thousand attendees yeah yeah for that i would like to be in like a 10k range if it's a really big conference where you're getting you know 50 000 folks so you know happier hunting ground as long as it's still relatively targeted then you can ramp up the spend from there but but i do hesitate now and i you know i may be unique among uh the folks out there as founders but i've hesitated to pull the trigger on events as fast as i used to where i felt like before it was just an awareness game let's get out in front of everybody now i feel like really looking at the numbers for the conference because i think there's lots of conferences that just popped up because it's a good market host a conference get a lot of people to come together and talk about sales but really starting to vet the quality of those conferences who specifically is going to be there what results got driven to what sponsors in the past and digging into that you get a better sense of if it's going to be for real or not yep that makes a lot of sense brandon you've done a lot since we last spoke acquisitions all kinds of other stuff let's wrap up here with the famous five number one what's your favorite business book man that's a great question uh i know last time i had mentioned really anything written by richard feynman he's a physicist from way back worked on the manhattan project uh lately i've been supplementing that i think with even more world war ii books as you know i live here in knoxville and just up the road from this is oak ridge tennessee which is known as the secret city so for any listeners that are interested in that sort of thing pick up a book about oak ridge and you'll find it fascinating during its heyday they were building houses here like one every 30 seconds in order to do the enrichment of uranium during world war ii so this area used like 15 of the electricity in all the united states during its peak time during the later stages of the world war so fascinating history for those history buffs out there number two is there a ceo you're following or studying right now i i i can't help but not follow elon musk i think he's fascinating i think the most recent article that i read about him i think was in rolling stone and uh they're really amazing i think the thing that jumped out at me is he said hey we need to start testing this and i think it was part of a test for a hyperloop and so we need a little segment in order to test underground and i think we could put it here next to our building and before the end of the workday they had started digging yeah and i think it's that sort of urgency that the team knows like when he says we're going to do swing it means we're doing it now we're not doing it after you know three months of meetings or feasibility studies about how big the hole should be just like start digging and ask questions later yeah meanwhile we're trying to get our software releases out on time that's right number three with besides you're on what's your favorite online tool oh man we're we're wearing out uh slack which is funny because going back to the beginning i thought look we have google hangouts we're set and then once the team got on slack and now like all corporate communications are on there and now anytime we're vetting new tools if it connects with slack then that's a big plus one for our team number four brandon how many hours of sleep are you getting every night uh right now i'm doing pretty well and i think because it's toward the end of the year and there's a lot of darkness so uh i'm doing a good job i'm getting to bed early and waking how many hours uh probably about seven that's good that's good what's your situation married single you have kiddos married two kiddos they're in early grade school that's great they keep me hustling and how old are you brandon i'm 38. all right that's 39. 39. 39 as of last week you know how there's that time period you get like a two week race period where you don't know your own age yep yes i just turned 39 or maybe i can't remember because i'm older congratulations yeah you get a free pass you're still in that window last question take us back 19 years what do you wish your 20 year old self knew uh probably how how to code more so so this is cool so a few weeks ago about a month ago we broke the guinness world record for a number of students learning how to code in knoxville we had over 8 500 students participate in it and they simultaneously did a coding lesson across all the schools and uh and yeah seeing them light up having their first coding experience i was like i wish i had learned more taught myself more of that back then i mean i can i can code a little bit build a website etc but the kids now including mine who are six and seven already so far ahead of where i am now and where i was then uh i wish i did more of that there you guys have it from brandon bruce more coding earlier on he's sitting on a rocket ship with cirrus uh just like 12 months ago doing 640 grand a month in revenue now up to about one you know one ish one one almost maybe one two pushing it a bit but one to an mrr really healthy economics less than two percent gross uh logo and revenue churn so lifetime value of these customers are well over 50 months paying eight bucks a pop on average so 400 dollar ltv payback now on new customers or spending 150 bucks to bring them in getting paid back in under 12 months growing their product offering with the recent acquisition of attach and also now offering in many other places besides just the salesforce app exchange as they grow with their team of 58 across knoxville and irvine helping you get more efficient at sales lead generation and closing those deals brandon thank you for taking us to the top