Clientpointrevenue, valuation & funding

hello everyone my guest today is andy jedinak as client points president and ceo he's a seasoned venture-backed high growth leader with extensive board and operational experience he's lived the growth of large-scale digital media sas iot mobile and app businesses in the b2c and b2b sectors andy began his business career at nbc ge after completing a successful career as a professional basketball player in europe andy are you ready to take us to the top absolutely all right thanks for joining so lupin brian real quick you're obviously founder or sorry president ceo what's bryan do so brian leads our sales and marketing and we're together today talking to clients so i thought we'd both hop on with you that's great okay client point tell us about the company what's the company doing how do you make money all right so client point is your digital wingman for your real world relationships uh in business relationships are obviously important they're everything so as you grow your business and get new clients and get new partners we create a custom website for every one of your sales prospects doing it is that simple drag and drop lightning fast and organized but it really what it is it includes all the documents you've developed to help you sell videos with marketing materials animations even ar vr content e-signature everything you need to help uh build the relationship close the deal you throw that up on a client point for that relationship and and boom higher close rates uh shorter sales cycles less proposal errors it costs you business uh you know plus for our smaller clients because it looks so beautiful to have this client point as part of your sales process they're getting bigger deals it really makes them look really really great so while you're doing the real work uh talking to your prospector your client in the real world we do all the work to support that relationship all aggregated together in one simple place all the stuff you exchange and work on together uh super easy point-and-click and andy how do you price so how do you price the sorry to cut you off but i want to get as much as possible how do you price the product sure so it's typical b2b sas pricing so we charge per seat per month okay and what do you charge percentage clients we also have a tiered structure and andy what do you charge per seat per month typically on average our clients pay 75 dollars per seat the larger ones pay a little bit more or the smaller one pay a little bit more the larger ones pay quite a bit less so would you self-select yourself in kind of the mid-market smb or enterprise space so we're the number one rate in proposal automation for enterprise so we're in about a dozen verticals in the enterprise space a lot of major clients that people have heard of but we have a lot of small business clients we have a lot of medium-sized business as well interesting okay put this on a timeline for us when'd you launch the company what year so the company started ten years ago was actually built to scratch its own itch it's a hell of a time no 2008's a hell of a time to launch a company i know well well the origin story is incredible so the the company actually started as part of a facility services company that was in trouble because a lot of the biggest global players were trying to to move into their into their territory they needed to figure out how to look really really big so what they did was they developed this proposal automation for their own company they did it for two years they beat back the global competition which is actually our clients today uh so they actually became our clients and then in 2010 we launched it made the product available and ever since then we've been cooking it so who led this spin out were you at the manufacturing company first and spun it out or what i know actually i just joined brian did as well we both just joined at the beginning of the year so the client that our we spun out last year we formed it called paperless proposal we spun out we rebranded as client point at the beginning of this year brian and i joined together and we've had a great year hold on i i missed the connect to paperless paperless as a proposal or pipeline yeah paperless proposal was our former name for many years so a lot of your listeners may have heard of us as that why'd you change yeah we changed it because we're really a lot bigger than just the kind of the idea of a paperless proposal you know what i mean our mission is to digitally super empower business relationships part of it is dating getting married as two companies together and a proposal is part of it but we're really the platform where you have your relationship between you and your prospect ultimately you and your client client point is a lot more fitting to that paperless proposal is very kind of a narrow narrow description that doesn't fit where we're headed and what go ahead ryan 2008 people's proposal was kind of innovative but now if you mention the name paperless proposal the quick objection you get is hey we're already paperless what are you talking about it was important that we changed for that reason too yeah interesting um uh there's always a catalyst when a new president or ceo is coming in and brian you're coming into what was the catalyst at the beginning of this year why did you guys come in well the uh the company clearly saw that uh you know that we have a product that is very well respected all the customers the clients we have in many industries love it and it's rated very highly the market seemed right to be able to grow so the board uh and the and the founders the chairman lawrence abrams decided it was time to really go hit the market hard the vector was going to be great and uh so uh they decided to make the make the decision and brought folks like us in and we've got a lot of background in growing companies so we did it you say board i think vc has the company raised about traditional capital it's all from the former company plowing money in yeah no vc capital yet uh we've got right now we're in the midst of a convertible round uh our one of the board members brought in the first quarter million of that convertible round when when we started to build the team here at the beginning of the year they decided to double it and since then we brought in more convertible investors all but one of which are actually clients of client point um so we're up to 900 000 we're going to one and a half million and then we're gonna do a five to seven million dollar round in q2 of next year so just be clear you're rising 950 000 today on a convertible note you're letting that roll to 1.5 does that have a strong closed date or no it's infinite until you hit 1.5 yeah it's going to close pretty quickly we see that it's going to probably close by the end of january uh maybe february well does it have but i'm saying what is the trigger to the closing is it a date or is it when you hit 1.5 when we hit 1.5 okay so this could technically roll infinitely if you never hit 1.5 it could yeah i would right now our pipeline you know has us i i don't think we have a problem circling that and getting that you know i i get that by the way what i'm saying is there there are a lot of people that roll convertible notes and what happens is it creates a really weird uh dynamic between the person that first put the first dollar in the note a year ago right that took all way more risk than where the company's at today when i put a dollar and because it's less risky you've proven some growth but they're all in the same terms that that's why i'm asking yeah actually great question great point and it's good for your listeners we've laddered up the note so it's actually in three different tranches at three different valuations oh i see i see three different caps absolutely do you also change the discount rate as you go up no we actually we just we kept the cap going up the discount paid the interest rate stays the same uh always interesting interesting model okay very good so okay that's your capitalizing company and what's the team size today how many people uh we currently have 25 full-time people and a whole lot of contractors okay and when you say a whole lot i mean what are you talking um i would say 12 uh 12 13 contractors okay so the 25 full time where's everyone based uh we have the sun never sets on client points so we're on east coast west coast philippines uh we are in india pakistan poland and we're based here in southern california so kind of remote all over the place uh most of the people are here okay we do have various people especially client service folks and then a lot of the we had some incredible developer team uh in india and pakistan interesting and then talk to me about churn turns critical on any sas company what's your guys's churn rate today and how do you make sure to keep it low oh okay we're getting um it's okay i'll i'll repeat it uh churns critical in any sas company what's your turn today and how to keep it low uh the churn is i think fantastic it's one of the reasons i joined the company a year ago it's one and a quarter percent uh most of which from a lot of the smaller companies sorry is that per month or per year one and a quarter per month okay and is that revenue or logo uh that is revenue logo about the same uh the revenue churn mrr is slightly lower than the logo churn um but when you look at the logos that have turned out they tend to be the small businesses that are more volatile anyway okay we haven't lost a fortune 500 company in over a year and a half so one and a quarter a month is about 15 logo churn per year you're saying revenue turns about the same or maybe a little less caught 13 14 percent because it's basically all the same rpus um talk to me about expansion triggers do you and maybe brian this is a question for you since you're leading sales do you guys have strong pricing axes that allow you to drive upsells pretty aggressively or is expansion not a real growth driver for you right now uh everything's the growth driver for us right now expansion's a huge deal a lot of times with a company like ours we're starting off with little pilot programs because we're coming on to a company that's been around for a long time now when we close deals it's more of a global rollout but we've got a lot of companies huge companies that andy and i walked into with pilot programs that we're now building a case for a bigger roll out and of course tiered pricing's a part of that what allows you to drive the upsell is it adding seats is it a usage based upsell is it just a product module based up so what is it yeah so it would be a seat upsell okay that's your only leverage is this per seat model you just add more seats we actually have another a pretty major strategy of expansion um that in talking to our clients over the last year and getting an mvp together we probably we think it's probably going to be a larger part of the business so it is a product expansion uh we're not ready to disclose it yet but when we talk in six months hopefully again we can tell you more about it okay so per se per seat obviously is a strong upsell but like the most powerful upsells you see out there are actually utility and data-based ones so hubspot it's number of contacts cloud checker it's percent of cloud spend you're telling me right now you guys don't have that metric built into your pricing axes you know we don't we already have the seats and tiers now and um but you're right we need to build a lot of those in over time um we're just delivering value and we'll evolve as time goes on yeah i know that that makes good sense okay good um talk to me about uh talk to me about how aggressive you're being to acquire new customers right so to get a new 75 a month seat what's your fully weighted cac look like the fully weighted calculator is about seven thousand dollars okay and how how many what is that contract size that seven grand is landing so i'll give you an aggregate so aggregate total lifetime you know value your lifetime uh you know value you know calculated obviously with gross margin not top line revenue so calculated the right way is about thirty five thousand dollars on average across everyone from our tiniest to our biggest um so seven thousand dollar a cap okay got it so you're spending seven grand obviously to get a 35 000 ltv and that is with gross margin multiplied on the back side of it so that's a conservative kind of ltd which is how it's supposed to be calculated yeah absolutely so investors hate it when you do it off the top line rather than just it makes you look bad right yeah it well so yeah it all i think context is important but yeah i always like to be conservative i like gross margin there um talk to me about a payback period though so you spend seven grand how quickly do you like to see that come back is it less than a year more than a year 24 months well right now it's 14 months uh you know a pro forma over the next five years you know as we bring investment in we're going to invest in the growth curve the payback will change based on different points in our in our customer customers or our country a company's future excuse me um but i would say right now it's 14 months which is acceptable because we're in high growth yeah so 14 months if you're spending seven grand uh that would mean what the the average the price point people are signing up for is something a little more than seven grand what like eight seventy five hundred on average people pay uh across from our tiniest clients for our biggest on average about about 500 a month yeah exactly yeah yeah so so basically what's happening there and this probably gets into brian's world is brian if each seat 75 bucks a month you're selling you know usually somewhere like eight nine ten person seats all the way i mean i'm sure you have enterprises where it's hundreds or thousands of seats right correct interesting okay very good um walk me through how you're landing these clients so what's the strategy is there a big team behind brian a lot of outbound what's it look like yes we've got a really creative model where adi both come from a background of selling info products in the personal development space of course andy's background is in tech companies as well but we worked together previously selling info products i've got a big personal development background and uh there's a company that we were doing really well closing about a million dollars a month in info sales personal development products so we decided to bring that to the sas model so we've created a webinar that's an educational basis webinar that helps people in the value of proposals you know some of the best practices and creating proposals that sell that automatically onboard them and get them as a paying client of ours from there some of those folks will sell self-select into an upsell funnel so we've got a team that's just helping us close the smaller deals and then i've got a small team reaching out to the big you know mid-market enterprise prospects as well yeah and on top of that we have uh you know a host of very large companies people like equifax principal financial um you know mcmillan publishing ortho clinical diagnostics securitas world leader the world leader in security a lot of major major corporations and because we do info sales selling to the very small businesses we can serve them it's an incredible product for small companies but also our focus when it comes to selling needs to be hand-hand selling needs to be the largest enterprise companies and really what is that that strategic partner selling change management within large enterprise corporations guys we're running out of time but quickly i'm curious i mean have you broken past kind of profitability at this point are you or right at breakeven how are you managing cash now we we continue to burn slightly ahead of our revenue i mean we're you know we're at negative event dial like you see a lot of bb sas companies um how negative i mean are you talking like 10 grand a month or 100 a month no i can't talk about the specifics of it um but but i'll say this that you know the typical b2b sas company is going to be five to seven percent negative ebitda because they're getting free cash by getting annual upfront deals our goal in 2019 is 80 of all deals will be annual upfront paid we want to leverage that cash as hard as we can so right now we're negative at ebitda but we're doing as strategically we can because we're growing fast enough to do it yeah i know you don't want to share how many customers you have can you share maybe a different metric which is maybe how many users you have actively using the platform i can't share that either but it's it's many many many many thousands okay of organizations or seats uh in terms of well seats and organizations um there's a lot more seats than organizations but but i really am not allowed to to share i'm not able to share the exact specifics yeah it's okay you just said thousands of so i mean we can assume something in the thousands at that point lots of thousands yeah that's good that's good no i mean look i the reason i ask that it helps me at least set a minimum right even if you're way bigger than this i mean i can take say 2 000 at 75 bucks a seat you're north of 150 a grand a month right i mean that's a minimum oh wait way up there yeah that's good i won't force you to go more specific because you said before you didn't want to so i won't push you there but that's what i'll put as a minimum i'll make it very clear it's a minimum all right what's growth rate look like year over year so we're we are now at 40 year-over-year uh we uh pretty excited about what we've done this year so 40 this year and uh uh pro forma we're looking uh very very strong for next year could actually be higher growth rate even though we're fairly mature in our growth yeah well i hope it's i hope it's faster if you're raising capital right that's that'll be expected all right guys let's wrap up with the famous five number one what's your favorite business book okay so i i've got to say scaling up uh it's a fantastic book we read it we love it we uh we think it's re for for a high growth entrepreneur for your listeners is probably the best book out there to help them in one little small package brian principles by ray dalio good i was going to throw the next one to you what's is there under the radar ceo that you're following or studying you know i i would have to say that that you know i really respect jeff bezos um i love to study what he does and how he does it uh and so i give him today brian this one's for you favorite online tool for building the companies maybe specifically the sales organization apollo apollo okay good uh andy back to you how many hours of sleep to get every night uh six okay and then up to six i was at five and a half but i'm working on getting more more hours good and andy you take us home here uh what's the situation married single kiddos i am married with a wonderful wife our anniversary 24th anniversary was three days ago we have three great young men 21 20 and 18. congratulations and how old are you andy i'm 56. 56 last question what do you wish your 20 year old self knew uh you know i've spent uh a lot of years having a lot of fun i was a pro basketball player i worked for nbc ge i was a television producer but i've always loved internet and what i will do as long as i possibly can i'll never retire it's growing small businesses doing what i do today i would have told myself at 20 get going with that now because it's uh it's what i love guys start sooner coming from andy and brian again join the client point team after a rebrand just about a year ago now they're serving thousands of seats they charge about 75 dollars per seat company launched in 2008 they're getting new customers using a webinar strategy and an upsell funnel uh they are doing about 40 year-over-year growth over the trailing 12 months burning capital right now call it negative five negative to negative 12 percent ebitda margins there 950 grand raised on a convertible note they're rolling that or letting it go through to about 1.5 million hoping to close in the next couple of months 25 people in california and remote about 15 logo churn per year no strong expansion strategy yet but they are developing that spending seven grand to get a new customer 14 month payback on a 35 000 lifetime value andy brian thanks for taking us to the top hey hey thank you hey listen one more thing if you've got another 10 seconds sure all right go ahead if anyone's curious about seeing our webinar it's finepoint.net create cache and of course it's not great for enterprise but this is if somebody's a small business owner then check it out we'll put that in the show notes for sure thanks guys all right thank you