How ClearMetal CEO Adam Compain grew to $4.3M revenue and 100 customers in 2019.

you're gonna love this interview just got done editing it i'm glad i got it live for you i'll be in the comments for the next 30 minutes hanging out answering any questions you have in fact leave a comment below about data points or what you think is going to happen to the company and i will respond to every comment additionally if you're just loving the content click the thumbs up and i will go and check out your profile as well and give your videos some love as well in the meantime enjoy the interview hello everyone my guest today is adam campaign he's the founder and ceo of clear metal before clear metal he spent five years at google launching their geocommerce technology in 19 years as the executive director of send and on property started he holds five technology patents two degrees from the university of michigan and an mba from stanford all right adam you're ready to take us to the top yeah let's do it all right so what is clear metal doing what's your guys's revenue model how do you make money sure we are an enterprise sas company so pure sas revenue model uh and what we do is we're actually solving the problem uh in global supply chains where the largest retailers and brands are feeling like the amazon effect is pushing them and their supply chains to a point where those supply chains can no longer perform in terms of delivering products around the world to the customers that need them and it's not being made any easier because the data and systems and methodology used in supply chain historically is largely static and so our belief and our solution is that the winning companies are going to treat transportation like the continuously evolving system that it actually is what they need to make that happen is a technology platform and solution set like ours that helps them continuously plan for global transportation and freight needs continuously monitor as inventory is moving around the world and shipping containers on ships trains and trucks um and continuously resolve issues that inevitably come up as you're moving billions of dollars of inventory around the globe with a pretty complex logistics eco so adam who's actually paying you is it the e-commerce seller that's shipping 20 000 units of shoes in the next cargo container from you know taiwan to l.a yeah it's the big brands uh retailers suppliers and manufacturers so really it's any company and some of the largest that you'd imagine that have a raw material like a wood pulp or a rubber material or plastic or oil um all the way to finished goods like clothing apparel shoes like you mentioned that's making its way from a factory or mill overseas into a distribution center or warehouse or a retail store or an e-commerce site that you and i buy off of okay so give me a give me a sweet spot here on average what do one of these customers pay you per year to use your technology and why do they pay you that what are they getting yeah sure so typically we're looking at uh six figures and seven figure contracts typically we're looking at i'd say load of often made six figures and then um you know low seven figures per year the reason the value of the product is so high is obviously because of the value we provide what we're tapping into is the ability to make customer facing decisions so if you're a big industrial supplier producing a material that goes into i don't know unilever procter gamble's supply chain we're talking about a lot of material and value so what we help these companies do is make more intelligent decisions about how to distribute that product into a business or into a consumer's hands and that's on the order of you know multiple billions of dollars of hundreds of millions of inventory so in short not to ramble here we make better decisions we help them make better decisions for customer service purposes and actually for inventory management what i mean is lowering the amount of excess buffer stock that you have to keep on hand to make sure that your shelves and e-commerce sites are full making different more efficient transportation decisions so you can ship let's say more by an ocean-going vessel than spending money to ship by air and then you actually make your whole supply chain team a lot more productive because they're able to manage issues as inventory moves in a more efficient manner so adam would you say 300 000 a year is a fair sweet spot for you guys then um sure it's a sweet spot we have deals in that range but higher uh pretty often as well yeah okay yeah by the way everyone has obviously power economics right there's two customers that make up a lot of your thing there's also really small kind of users but i want to get in the sweet spot just because we're short on time so if let's say let's say someone is paying you 300 per year what are you pricing against like what's the what is like what's the utility metric is it is it pounds of things shipped or number of cargo shipments or dollars saved or what yeah so our pricing model is basically a um a fixed platform fee for all the services we provide across that planning uh monitoring and resolution capability and then the variable fee comes in with the volume of shipments that they have globally so if you're a company that is moving a lot more inventory than less measured by what those skus weight containers uh it depends on which category we're serving but the easiest way to think about it is amount of containers full of shipments so containers okay we're importing you know 10 000 containers a year or 100 000 containers a year that's where your price might be a little bit different in tier but there's still that base platform fee for all the underlying data science and ml and services we provide okay okay interesting and that base fee is it the same no matter how much you're shipping or do you have stages as well you can get like the less features the the middle features or all the features and there's different price points on that base as well at the moment we actually have a fully loaded product that's a standard uh tiered base rate okay so on someone paying you 300 000 per year how much of that is gonna be that fixed rate just to unlock everything um we uh so you're talking about percentage or absolute uh whatever you're comfortable sharing i'm just trying to get a sense of what's the if again if someone's paying 3000 bucks per year are you talking like 100 000 base no matter if they ship nothing or 100 million units or got it got it yeah i mean typically you know we're talking probably uh call it 50 60 percent of the fee would be affixed and the variable component is often a lesser component of that okay let me let me see if i got that right so of 300 000 spend with you guys you're saying 50 to 60 percent of that will be fixed and then the other 5 40 to 50 will be variable uh that's exactly right yep okay so this flat fee to unlock everything is variable across every customer account say again nathan that flat that flat fee that every customer pays is variable across every customer account based off the total projected volume that year no so well let me clarify what i'll share is look we have a tiered sas pricing model which is pretty typical and then the two components the larger portion of that annual subscription fee call it 50 60 is gonna be that fixed rate depending on your tier as a customer i see okay that's what i was asking in other words you don't charge every customer no matter what a hundred thousand dollars per year to unlock everything even if they ship nothing what you're doing is seeing what category they're in and then there's economic split you know 50 50 ish between the flat fee plus the you know number of cargo full car container shipped that year yeah that's basically right but just to be extra clear there is no customer we have today that does not play does not pay a fixed platform fee for all the services we provide got it okay that's helpful that's helpful okay let's get your backstory here when did you launch the company or when was the first kind of line of code written sure we uh at the turn of 2015 so call it 2015 is when we founded the company okay and when you get your first dollar of revenue uh let me think actually right about that time so we were uh kind of lightweight prototyping incorporated the company because we had our first trial customer at that point willing to pay dollars and we couldn't have been personally reliable into the corporation behind it okay wait so just to be clear you wrote the first line of code in 2015 and actually collected in your bank the first off revenue the same year for a complex piece of technology like what you guys had to build to make this work uh it's correct i mean it's certainly not as complex as as it is today but yeah we were under a commercial contract with first dollars collected within the first year we wrote code yes okay that's pretty great that i mean it's great so i mean have you been able to bootstrap this then or have you guys raise capital so we raised capital in 2015 we were actually founding the company out of stanford's business and engineering schools my two co-founders um and we were bootstrapping at that point for probably nine months close to a year before raising our first round of capital we've now gone through three rounds of capital with a total investment of around 25 million or so adam that's a lot of dilution why did you have to raise so much um i honestly for what we're building i don't see it is that uh that much well everyone would say that everyone no in all seriousness why couldn't you keep being scrappy keep pulling contracts forward keep pulling annual pricing forward why'd you have to sell part of the company uh a couple reasons i mean first what we're building um is complex it requires a lot of investment we're solving a 30 year old problem that hasn't been fixed yet that requires you know high caliber talent data science world and some very sophisticated folks on the commercial side the second reason is um we're selling into some of the most complex and largest organizations on the planet and so we have to invest to build and develop what is proven to be valuable prior to um you know really expanding but that's not true because you got your first customer with nothing it was you you got your that's why i asked the question yeah i see what you're saying i mean the point the reality is um we're i think here's really the root of it we're trying to build a very big company and while we could have to your point simply gone about it the same way when we were bootstrapping before capital fat we have experienced faster growth as a result of taking in more capital and i think there's a larger valuation and company as a result yeah yeah by the way i'm pushing here because this is always a balance right i just it drives me crazy when people uh when when people discredit bootstrappers by saying i think i'm building a bigger opportunity therefore i'm raising i think there's a you have to bet and hope that the money you raise does actually drive growth otherwise you end up as the next blue apron right totally yeah and i think this is a great point honestly the look what we're doing today right we are investing and you know um yeah investing have you know heavily in broader expansion in europe from a personnel footprint perspective we are investing with high conviction around building kind of the next product and feature set because we believe that that will help us increase the annual sales price asp um and get a broader customer set than our you know targets today what's the team size today how many people today we are um about four approaching 50 about 40 today okay 40. and what's the breakdown how many engineers about half the company is in the development side okay and how many quarter carrying reps reps um we've got uh today between five and ten and we're hiring actively right now how did you figure that model out how did you get your first sale higher done what pro form would you put them on what was the kind of bookings or new bookings ar target yeah i think you know typical for our kind of stage in size sas you know as we move forward you know reps carry anywhere between a million or two million uh per year um we figured how did we figure that out um some experience some advisory you know following pretty typical sas models in our view yep and will their full earnings at ot be something like 250 grand or about one fourth of the of the kind of the ar target um you're asking pointed and great questions yeah we're pretty in line with typical sas rep uh yeah then obviously looking for quota to uh sorry coverage to quota uh or quota to coverage of about three four x what we're looking for in terms of uh what we're looking at represents yeah yeah some people call it salesperson profitability some people call it you know ot to you know to ar ratio whatever you want coverage ratio whatever you want to call it um but that math works right that math works which is important um okay uh tell me about the first customer so how do you have an inside scoop with them how did you get them to commit to paying you money up front when you had nothing yeah sure so the company actually evolved quite a bit we started uh selling our software to the logistics providers themselves prior to us evolving the business to sell to the brands and suppliers whose goods are being carried by those logistics providers so i think big companies like marx that have ships and containers that's what started we evolved the biggest companies you know you know just as an example a company like nike or home depot or big physical uh businesses um so anyway the first customer uh the company was founded after some time i spent over in hong kong at one of these logistics providers during business school i came back with a general insight and understanding of a problem space they were experiencing about moving assets around the world with a kind of low predictability and then my two co-founders and i went out of the problem um to really address it and see what we could solve we had built up um general understanding of the problem through interviewing the industry uh gained a good vernacular and understanding of the underlying dynamics of the problem and had basically a lightweight prototype hypothesis on how we could solve it so through relationships really cold calling we found our first customer to work with um and work with them on an early prototype first lines of code little mock-ups and see if we could technically solve the problem before we then determine whether this is a a nice to have or a big strategic need yup no that's i mean that's obviously a good way to do it so that was your first cost server back in 2015 and then update us today four years later how many customers are you working with yeah so we're working uh we have dozens of customers i'll share um they are across 10 verticals industry verticals and actually sit across four continents um and again some of the largest kind of fortune 500 or if you look at you know gartner's top 25 supply chains were engaged and working with about 25 of those top supply chains sorry gartner is what what's it called yeah gartner has a listing area of the top 25 supply chains in the world okay and if you look at that list big companies apple unilever proper gamble folks like this um and you know we've evolved quite a bit evidence being um not only did gartner name us a cool vendor and ai supply chain but a quarter of all those top supply chains have actually engaged us for further help on digitizing their supply chain good well i mean that six or seven right there are a quarter of 25 and if you say a couple dozens we'll assume a north of 24 is fair today correct that's correct yeah that's good now can i multiply that times that that rpu you gave me earlier 300 000 a year that puts you at about 600 000 a month in revenue or north of that today i'd say uh yeah we um what i'll say is this because it gets touchy with revenue as a private company we we're actually very healthily on the track for series b um and i think you can call out generally what those metrics look like um i don't know actually i mean what would you say those are let's see i mean i'd say companies around silicon valley and sas we're seeing anywhere between um you know five to 12 million of ar annual recurring revenues per year is typically that striking point of uh series b which would be you know 20 to 40 million of additional capital should you want to grow the company with that new trajectory so i mean we have what two three months left in this year i mean do you feel good about breaking the five million mark by the end of this year i feel good about what we're looking to go we're trying to in the next i'd say depending on how we want to pace it within the next year raising that series b um and for us it's really a determination of uh in an early but you know growing transforming market when do we want to step on the gas and based on our kind of commercial traction and revenues and union economics that we understand and can repeat when do we want to really throw fuel on the fire so that's kind of how performing the wings a little bit but dude but to be on pace to do that next year i mean do you feel like the number you know to finish this year out you got to get above like five or or is it more like seven eight nine ten honestly we're trying to get as high as we can as quick as we can i think um you know look if we're trending if we want to do a series b end of next year and we're hitting you know eight by eight by end of year that's way ahead of pace we'll pull the series b forward yeah if um you know we're trending lighter and there's some big contracts in the works we'll pace it back but we're totally uh uh looking pretty good actually that's good that's good so we'll we'll put like you give us a nice range right so 24 customers maybe more like fifteen thousand dollars a month is a more a more fair average right so something more in the kind of you know four or five million dollar run rate today or by the end of the year with hopes to get up to that you know seven eight nine ten twelve mark by the end or mid next year so you can do that series b is a fair statement i'm not i'm not going deeper now we got we got investors and folks that uh may want to invest online although i am comforted because i know this will air far after where we are today yeah but i think within the guidelines we're talking yeah we're looking pretty strong yeah i just i mean i i just still you know being you know modeling everything off like getting to like the next round of capital to me just it seems so silly especially a creative guy like you you've shown you can pull cash forward with nothing it's just like why not keep trying to do that you're going to take another 15 20 dilution raising 20 to 40 million with you know 10 million in arr yeah i guess that's just a decision you want to make no it's actually it's a great point you know i think um there are a couple of other factors that we're working with right you know one is again uh well i don't think this industry is a win or take all i think there are a few going to be a few significant players that really go the distance and we obviously intend to be one of them i think given that there is competition whether perceived or real and when i look at that we're saying hey at what point do we really want to step on the gas and how much market share do we want to take now you're right that we can contract customers into seven figures that funds us in a really nice way but we're dealing in a early and fast-changing market with a um the window wide open to kind of be the the player in that space and competition we have to think about how do we continue to develop maybe even further than we would if we were just trying to be uh customer funding i mean look all it's fine all this is fine as long as growth is there right so i mean if you're like if you're flirting with 400 ish a month today right i mean do you a year ago were you less than two hundred thousand dollars a month do you have more than 100 year over year growth yeah we're i mean we're looking at uh probably four x uh year over year oh okay i mean so you're doing like a hundred grand a month a year ago then if you're flirting with 400 today four hundred percent correct yeah yeah wait why sorry why do you isn't that the same thing well i'm just trying not to give you the exact run rate we were at now and then that's oh oh oh oh oh oh that's fine yeah that's fine i mean look i mean we can we can get an estimate right you told us dozens of customers so minimum's gonna be 24 right at like a 15 or 20 000 a month price point i mean that puts us in i mean we're talking about a delta here of you being vague to the tune of like maybe it's as little as three or as much as five right you're not being that vague right it is what it is true that's still healthy growth right so did most that growth come from expanding accounts or adding new accounts altogether good question i don't know the exact breakdown um but every account we have renewed and most often expanded um i'd say the the much larger percentage is obviously new given we came you know we really had a breakout year in 2018 after finding product market fit and um most of the growth has been new yeah how come i mean with what you've raised you have to burn capital to try and drive growth but how much burn can you stomach i mean are you cool with like 300 400 grand a month right now or you want to try and keep it lower we i mean honestly we're trying to burn as much cash so long as it drives value and growth for us so we would be cool even higher than those amounts um you know as long as it's it's driving revenue activity yeah i mean is that about where you're at right now i mean how much are you burning right now per month [Music] i can't go here again um uh i think i mean you could do the math also right right we have a team of uh you know call it 40 approaching 50 and are hiring aggressively um and you know what it takes to support the customers and in a sas business right most of our uh most of our burn is going to be around personnel yeah adam you could just make this easy for us it's okay i mean you raise capital typically people raise for 18 to 24 months of burn that would put your burn today at around 400 500 grand a month in that range generally in that range perfect all right last question before we wrap up turns critical in a sas company so when you look at your gross revenue turn past 12 months what have you kept that down to second gross gross revenue churn past 12 months ah so actually we're looking pretty um solid there 80 percent of folks that we engage with in a phase one deployment actually 85 convert to full subscription contracts in the event that we have to do trials beyond that um churn we have not to date had a customer churn after subscribing to our software what about downgrade revenue they don't have to churn they pay a dollar less the dollar return um we have not had any downgraded revenue okay so no gross revenue churn today and expansion year over year looks like about what correct no no uh no churn no gross turn and expansion looks are you talking about the 400 percent growth we're no that's total business i'm talking about just the core that signed up a year ago writing nor new customers the customers that signed up a year ago what did they expand to over here um the numbers are gonna be really skewed we had a few that really um jumped up um well don't do it on a logo basis though adam so if you had if you had them if you a year ago you had a million dollars uh well let's say 300 a month in revenue ignore new customer ads if that 300 thousand went to 330 000 right you can do the math in terms of what the expansion was uh true i'm not really trying to hide much the reason so i'd say generally the easy number it looks like about 30 growth in existing accounts the challenge i have is we have a lot of q4 renewals yeah yeah yep fair enough fair enough okay and then last question fully weighted cac to get one of these new kind of 200 000 a year accounts are you are you comfortable spending first year acv um we would be yeah yeah because of the growth and expansion that we're seeing yep makes sense all right famous five number one favorite business book um famous business book uh uh managing uh what's it called having hard conversations managing hard conversations forget the title number two is our ceo you're following or studying uh continues to be our schmidt uh number three what is your favorite online tool for building your company give me a second um calendar and getting events off of that calendar number four how many hours i sleep to get every night i'd say six and situation married single kids uh engaged congratulations that's exciting all right and no kids no kids no kids all right and how old are you i am 33 33 last question what do you wish your 20 year old self knew ooh um this would be an exhilarating road and uh a hard one so buckle up and um remember to have fun along the ride guys there you have it clearmetal.com growing about 4x year over year uh they raised about 25 million to do that again ai for global supply chain and freight transportation systems uh 40 folks on the team right now burning between 400 and 500 per month as they drive growth again healthy growth flirting with and hoping to get to that five to kind of 10 million run rate mark before thinking about doing any kind of series b serving about 24 or north of 24 customers there are dozens of customers founded in 2015 those price points somewhere in the call at 200 to 400 to 500 000 kind of per year range with some outliers and the seven figures as well adam thank you for taking us to the top thanks you guys know i fight like heck to get these data points for you from these ceos that rarely do these kinds of shows if you want more shows like this make sure you subscribe right now we're trying to get 10 000 youtube subscribers by the end of september here 2019 and it would mean the world to me if you clicked now to subscribe additionally i've got two more great interviews for you if you want more data points from the world's leading sas ceos click and watch one of them right now