How Cloudcherry CEO Vijay Lakshmanan grew to $1,000K revenue and 100 customers in 2020.

this is the top where I interview entrepreneurs who are number one or number two in their industry in terms of Revenue or customer base you'll learn how much revenue they're making what their marketing funnel looks like and how many customers they have I'm now at $20,000 per talk 5 and6 million he help on global domination we just broke our 100,000 unit sold Mark and I'm your host Nathan lka this is episode 682 coming up tomorrow morning I love this story four very smart phds chose entrepreneurship instead of instead of a big job and as a result they raised $75 million for data in their in data indexing tool called calibra good morning everybody my guest this morning is venod muuk Krishnan he was first a sailor then a strategist and now an entrepreneur he was fortunate to have worked in diverse and challenging environments starting with the Merchant Navy a high energy mobile First Financial technology startup where he headed strategy and Global sales and now he currently serves as co-founder and CEO of a company called Cloud Cherry a tech startup based in Pleasanton California with offices in Singapore India and a new location we're about to see but not are you ready to take us to the top yes I am okay you're two days into a brand new office show us around what are we looking at here all righty so let's do this um so this is Salt Lake City um where we our first batch of five people undergoing training on the product just hold on a moment and while while you're walking around what's your current team size uh we have 74 people 7 74 yeah they're primarily between India and Singapore okay and we yeah and what how much Capital have you raised you've rais some Capital so we've raised 7 million in the last month total I think we raised close to9 half million okay and before you show us the office just quickly the on liner what does cloud Cherry do uh it's the it's the voice of customer platform for Millennials um who are having it's really the VOC platform for Millennials sorry a video platform uh VOC voice of customer oh voice of customer platform so what people can collect like testimonials from Millennials on it or what so I mean the point really is that Millennials are having very complicated Journeys with the brands they work with right some are on mobile some are on the web some are in stores some are social and if you really want to understand the customer in 2017 you need to be present in all of those channels right you need to inside of the app like uber does right you need to be able to people when they're in your web experiences you need to be able to speak with customers in store on ivr on social media all these channels that customers are present in on a real-time basis and be able to analyze act and do something about what customers are telling you so it's really a feedback platform but on speed so Cloud Sher helps businesses talk to Millennials on speed across all platforms absolutely time absolutely let's see this beautiful office guys if you're listening right now via the podcast on iTunes there'll still be very episode but make sure you check out this episode on YouTube so you can see this office of shown us around yes sir so this is the inspiration wall so whoever joins us usually comes in and puts up an image that truly inspires them so it could be anything from philosophical to downright funny but we believe that because you need to walk into your office every day and be inspired by what you truly believed in so this is kind of sort of an anchor this is the standard we hold you to Dr Seuss quotes pictures inspirational things I love it George Washington saying his prayer we' got something about sharks not complaining on Monday yeah we got we got all sorts of things so back in India office of course we got 70 more uh such images so we said whoever visits the US office will get to put their name on the wall so that's so that's that red is our brand color as you might have guessed might have guessed so we have six pillars of our culture uh which is freedom ownership smart work passion and a couple more I'll show you later right give us a wide shot real quick at the office just so we don't get dizzy so we understand where we are hey everybody say hello people that's Nathan he runs a phenomenal podcast and he's covering us this week so what's up guys I'll just I'll just put your L all right hey guys how are you guys do you all like Cloud Cherry as the new office like amazing amazing love it they were paid like vode paid them off 20 20 grand a pop to say yes nice meeting you guys all right um where are we okay let's go back so that's sort of a delight wall I love this so it's a pretty big office how many square feet is it are you there it's not it's not it's it's 2,000 square feet and what just out of curiosity but know what do you pay for 2,000 square feet there it's actually it's it's in south of $2 a square foot which is annually or monthly monthly I mean I was to say that would be a steal so about 3 four grand a month in rent what I really like and this is something you should see is the view that we got just hold on a moment this is the view what are you what am I looking at here so you're looking at the Grand America Hotel which is sort of an iconic hotel in in Sal Lake City and you're looking at the hills in the background I know it's a little little unclear but you got snow cap mountains in the background and it's beautiful it is it is it is okay let's let's dig into the cloud Cherry business so how many years ago did you launch it so we around three years old yeah three years 2014 uhhuh 201 and is your business model A SAS model pure SAS we are a pure play SAS platform okay so 2014 you raised you said $7 million total no we've raised around nine total seven was the last round okay and when was that last round what month September 2016 just just a few months ago okay a few months ago good uh you said 74 people and you've got offices uh we we covered that in the intro but now you have obviously one in Utah as well um how many customers are you serving to date so we have close to 100 cust customers um a lot of them in Asia because that's where we started uh but the massive push now is to grow the business in North America because we saw a lot of inbound demand but we were not able to service it remotely and hence we have the team here and is this I mean is this like an Enterprise play I mean if you have 100 customers and you're raising 9 million I assume in a healthy valuation these these monthly arpus must be pretty high that's a good question so I think um custom experience is not for a single single presence if you have a single store or a single restaurant you probably don't need a customer experience platform right so we we have an SMB practice that is serviced out of India the global SMB practice but the team here really hits midmarket and Enterprise so the True Value shows itself when you're selling into mid-market and and Enterprise that's where so what's the currently what's the average customer pay you per month um so I mean the smvs could be even couple hundred bucks a month but the average appu for an Enterprise customers is is the tune of a few thousand so a mid-market customer could be uh monthly at $3,000 a month an Enterprise customer could well be $155 $220,000 a month so that's the spectrum between midm market and Enterprise so I mean can I can I take a $3,000 monthly average times 100 customers and assume you're doing about 300 Grand in Mr or is that high or low uh we don't share any of our Revenue numbers I told you you can ask me the questions am I not give you the answers is there is is is the math wrong though right 100 customers times a three grand average is there anything wrong with that math um so we have a composite mix of customers we have customers who pay us more we have customers who pay us less so it's really somewhere in the middle so don't worry somewhere somewhere by Jan 2018 I'll actually publish my public numbers so give give us a range though like make it as wide as you want to keep it vague I mean are we talking like under a million monthly recurring revenue and and greater than 100 Grand like give us some big range yeah so I think uh uh a million North is is the right right ballpark you said sorry a million what north of a million is the right ballpark yeah Oh north of a million dollars per month yeah yeah annual annual month I was say Okay annually got it so you're doing you're doing more than 88 Grand per month which is more than a million dollar uh run rate you did the 9 million uh round in September or sorry 7 million round in September you have 9 million in total funding walk me through what does a company like this look like in terms of customer turn per month so we to be honest we have uh almost zero customer churn in SMB at the moment again it's a history of factor of us being a fairly young company uh in Enterprise the the churn is single digit like low single digit wa I never hear I have never heard with all the interviews I've done over 600 someone tell me that their Enterprise churn is higher than their SMB churn so if you look at Enterprise right if you if you have one customer going it's like 2 3% right whereas SMB we have had no churn none of our customers have left us that's that's the honest but but but I don't understand I mean small businesses go out of business more frequently than Enterprise usually you hear a gross customer turn monthly on small business somewhere between 4 and 8% in Enterprise is typically typically net negative because expansion arpo is so prevalent yep why your backwards so uh if you look at net it's actually negative but I'm talking about gross Jour in Enterprise that's around 2 to 3% right in SMB funny enough because of the price points that we operating in so we are pretty much giving uh a customer experience platform at uh uh a survey platform price right so most of our customers we don't have like 100,000 customers right we have fewer customers and at this point in time many of our customers have been with us for 18 20 months and none of them have left us so that's that's the actual number so you launched you launched your price plans back in what you said 2014 no we actually went out to Market in 2015 okay but what you're saying is if I go and look at every company that's ever used you starting in 2015 I won't find one that paid you for a month and left yep not an SMB Fisher and how do you define SMB so SMB okay so basically SMB customers are the ones who are at an arpo of if you look at annual ARR of south of 20 grand south of 20 grand yeah per year so 13 Grand 1300 bucks per month something like that okay so that's how you split 1,300 bucks per month and lower is small business and above that is mid-market Enterprise got it and what is does your kind of customer based follow the 8020 role in other words you have 80% are small business customers and 20% or Enterprise or no so today our split would be closer to um 35% uh uh mid-market and Enterprise and maybe 65% SMB got it but you look at the Q at the same time next year um uh if if you look at Value terms of course the Enterprise will be much larger right look at numerical terms also the midmarket will grow up a lot of our focus is towards midmarket and upwards yep okay got it so 100 you have 100 customers right now about 35% paying less than 1,00 bucks a month and then about 65% uh paying sorry 35% you said small business other way the Enterprise is% ex 35% Enterprise so 35% paying more than 00 bucks a month 65% or about 65 of the 100 customers paying uh less Le than 00 bucks per month you obviously want to change those ratios over time as you grow in North America what about paid acquisition I assume you've raised Capital you know how to spend money to acquire customer what's your CAC um so if you look at CAC so usually I won't go with the absolute number but my time to recover CAC is south of 12 months 12 South of 12 months so it's it's in in some with some campaigns it's 7 to 8 months in some campaigns it's 10 to 11 months right got it and my C 2 LTV is around 3 and a half to 4 and a half depending on the customer segment so we don't track so what we've done is we've broken down a pnl into the Asia Pacific pnl the middle EAS and India pnl and the North America pnl right and also by customer size mid-market Enterprise and and uh SMB customers and we look at each in isolation otherwise if you look at a composite data it does not give you an insight into how your business performing so each pnl runs separately so hence the range is between payback period of 7 to 12 months CA to LTV between three and a half and four and a half really depends on the seg well you said at minimum you're doing $100,000 per month or or a million dollar annual run rate so like 80 or 90 grand per month uh in Revenue with 100 customers I mean on so on average they're paying a grand per month so if you're averaging you know a seven-month payback to a 12-month payback you're spending somewhere between seven Grand and 12 Grand to acquire each new customer is that accurate yeah yeah and you're assuming and sorry you're you said a 3.5 to one kind of LTV CAC ratio so you're assuming right now about what like a uh $36,000 lifetime value something like that that's always a tough number for people to figure out because there's so much extrapolation happening how do you make sure you're not lying to yourself when you come up with your LTV no good point good point I think I think she you need some amount of the optimism needs to be weighed with intellectual honesty right um so you should be looking at to be honest the greatest predictor of all of this to me is churn so we've had our you know churn in the past of course that's maybe uh 12 months ago when we were not really doing a great job of delighting our customers right and if you look at the fact that you can hold on to your customers over a 2436 period I never believe that you can hold on to a customer because they're contractually obliged to stay with you right yeah no that's not good you're getting value so one of the things that we are very very focused on for the last year is actual customer Delight it may seem very counterintuitive but no customer experience platform is known for super superlative custom experiences like a zap house or a rich carton right so we truly throw the kitchen s so we've actually got two uh feedback on I think on capter or G2 crow in the last 10 days right and both of those customers have extensively spoken about what a delight it is to work with this bunch of people that they're working with right so as unscalable as it may seem throwing the kitchen sink at customer Delight ensures that your customers stay with you and as a believer in net promoter score if your customers genuinely like doing business with you and they stay with you right the resultant LTV the resultant value of referral right the resultant non-paid customer acquisition is is something that will always fall into the buckets that are treated as standard right so I don't look at it as oh let's let's tweak these metrics I look at it let's Delight customers let's have a very high NPS and the numbers will just fall into shape are you burning cash per month uh right now or are you break even yeah we are we are burning some cash which makes sense right because you have 74 employees you're doing about 100 Grand in Mr and you've raised 9 million so you have plenty of cash to spend yes so I think we have cash to grow the good thing is a lot of so our crost are split between Singapore India and the US right so we are fairly efficient in terms of a cash burn I can't share exact numbers with you so a we do have money to burn for growth but if you really wanted to hand it down and say there's no Capital at all and you want to be profitable we could very easily be that yeah um makes good sense let's wrap up here with a goal what do you what do you hope to hit December it's December 2017 now what do you hope your AR run rate is by December 2017 what are you hoping to grow to so we should be uh not a 4 million AR okay got it so call it 240 Grand in monthly acquiring Revenue by December 2017 you said four million AR or 3 million four four four million four million got it so more like let call it you know 300 Grand right 300 something like that 320 good that's a big goal and what would that be month year-over-year growth like are you aiming for 10% 50% 100% year over your growth or no so this year the back math is very easy but I'll tell you the the rough plan right so you basically want to um uh you want to Triple in Revenue every year at least till you hit a certain number uh so SAS company triple yeah yeah SAS companies like us usually at the stage variance should be tripling in Revenue every year right from a pipeline perspective I honestly have more bullishness on hitting Crossing that number but 3x I believe is a number we should set ourselves and say if you're not growing 3x at this scale uh then you're probably not growing fast enough so guys I'm so glad to be back in Austin I just got back from a major tour of Southeast Asia went to Sydney Bangkok Bali and Japan and you know I get sick when I travel and this particular trip my gosh 15 different airports 20 different hotels I mean imagine flushing in airport bathrooms I was worried about germs and getting all the nutrition I need I mean finding a restaurant in Japan difficult because nothing's in English so it's hard enough to figure out the train system but my point is I had a guy named Drew canoli on the show who said Nathan if you're concerned about that take these little green packets with you you just mix them once per day with water they'll keep you super healthy you get all your nutrients and they'll keep you from getting sick so I took them and guys they worked unbelievably well I got no sickness just mix them with water once per day they didn't make my water bottles all sticky that's like nice a lot of these mixtures they make them sticky it was very clean and smooth took them once per day never got sick so they've got 11 superfoods and they're perfect if you're not traveling but you're just on the go from your office to work so you can check them out at Nathan la.com juu that's Nathan lanka.com slj y okay good makes good sense let's wrap up here with Famous Five you ready all right no these are like easy questions right number one what's your favorite Business book uh high output Management number two is there a CEO you're following or studying right now I am it's actually Nick MAA from gam site sorry who Nick Nick from gam site Nick from gam site okay good uh number three besides your own is there a favorite online tool you have online tool y um I actually love uh oh man there are too many sorry uh let's just stick with um Trello Trello okay and number four how many hours of sleep do you get every night good question uh last night was three if you really average it out over the year it'll probably be four and a half to five that's because that's very little and what's your situation married single do you have kids um married uh my wife's Dutch two daughters five three and a half wow okay so super young and uh and how old are you I'm 37 all right last question but no take it back 17 years what do you was your 20-year-old self knew um well uh oh good point so I was in The Merchant Navy when I was 20 uh and I wish I knew programming back then to be honest I wish I was a there there you go have it from v no just opened his new office in Salt Lake City two days in it looks great he wishes he knew programming back when he was 20 years old his company Cloud Cherry is sitting in the clouds they're growing fast they raised over $9 million $7 million around back in September 2016 they've got 74 team members braced all across the world currently serving 100 customers doing somewhere around 100 Grand a monthly occurring Revenue with the goal to grow that to about 330 Grand in monthly recurring Revenue by the end of December 2017 which would be again about tripling year over-year super healthy churn $112,000 CAC $36,000 LTV all estimates based off data and cohorts vode is expertly analyzing V thank you for taking us to the top absolutely Nathan thank you so much for your time if you enjoyed venod today go back and listen to Eduardo yesterday he's the guy that Gary vaynerchuk and Ty Lopez have paid a lot of money but try and keep a secret that they've done it because he's really been responsible for growing their Instagram accounts it would mean the world to me if you guys got any value from this episode if you would go leave a review on iTunes right now and then subscribe you know I hustle like heck to get these episodes out every freaking day for you guys and trust me I love it I would do it with no listeners but boy oh boy it makes my day and it makes my team's day when we see great reviews and get your feedback so thanks so much okay top dbe I love giving away free money I feel like hope we giving away cars and I have something special for you today how many of you have heard our super sharp guests talk about success they've had with Facebook and Google ads well all of you listening right now yes if you're listening you get $100 in free AdWords here's how you get it okay again thanks for listening get the free $100 from Google right when you sign up with my website post provider HostGator go sign up now to get your free money hostgator.com Nathan again that's hostgator.com SL Nathan [Music]