How Commercialtribe CEO Paul Ironside grew to $21M revenue and 200 customers in 2024.

hello everyone my guest today is Paul Ironside for the first 18 years of his career he built and scaled sales organizations at both Gartner and CEB the corporate cultures instilled a sales rigor and discipline that has helped to make celebrate the complexity of sales management operations as well as the development of reps and their managers he's not doing that full-time at his current company commercial try but Paul are you ready to take it to the top I am I am sorry a little bit of a reporting issue but I think I'm ready to go no worries Paul alright so everyone has to sell you're in a hot space everybody needs you in an ideal world tell us about the company what are you doing how do you make money yeah sure so thank you for that and thank you for carving out some time for me this morning so commercial tribe is in the business of helping sales managers and reps engineered a goal and what we have figured out is how do we begin to identify the key critical selling behaviors that if in fact modeled to a high standard across the sales process will actually engineer a rep to goal and how so how are you doing that is this you know we've had people on like dial source or call rail which are you know plug in to the call system others go to the CRM rather there's a lot of different angles you could take how to you twitting what do you take yeah sure so it's all built in this concept of manager effectiveness and so you have to first and foremost subscribe to the fact that behaviors in fact will drive performance that you are eight players are doing something different than your beat players than your C players that's the first kind of concept you need to grasp the second thing is as you think about a sales process there's a beginning middle and end to that process and the behaviors are different and that we can as sales managers observe those behaviors whether in a live setting and a face-to-face type of a sales call and or participating in a joint call where a rep is dying into a conference bridge I see you getting to assess those behaviors and correlate them back to performance sales model wise are you typically bottoms up one rep finds you start using you on their personal credit card then you land and expand are you selling directly to the the chief revenue officer we go top-down so good question we go top-down selling to the chief revenue chief sales officer in through ops and enablement and in a drive not to the point you that's great just before we get more your bet we move to your back story here I don't know Don every customer right now but on average what is a team paying for commercial tribe permit sure so our target seven segments tend to be the enterprise based segments so large organizations that have a global footprint lots of sales executives we do get into the what I'd characterize is the larger kind of mid market segments organizations with at least a hundred sales executives tends to be our target okay and quantify that for me so is that I mean they're paying you a grand a month ten grand a month a million a month generally speaking larrya I would say that our you know it ranges from about you know twenty-five thirty-five thousand dollars on an annual basis up to you know four or five hundred thousand dollars a year got it just depending on no is it typical that they'll start on the maybe 35 a CV and then you're growing or are you landing contracts right at 500 grand and your what else would be correct that's typically the way that it works is there's adoption in one particular business unit and we look to expand by role region or or business business unit yep the reason I ask that is later on this call because you are sales guys I want to talk about how you forecast and kind of put a pro-forma together for every new salesperson you hire in terms of ramp-up rate with all that jazz so I'll talk about later let's put this up this bad boy in a timeline though when did you launch the company about four years ago for case of 2014 and where was you're headed at that point did you just you know quit your big cushy corporate job and where were you at soso yeah so sometimes they characterize it as born and raised at Gartner individual contributor turns sales manager kind of classic trajectory I was there for eight years I left went to an organization based in Washington DC the corporate executive orders CEB there for 10 years last couple years I ran the sales organization direct for the chairman CEO $500,000,000 kind of a our our target 600 sales executives some would say that's its scale and you talk to the head of sales at Cisco that's kind of a rounding error so to speak but that was my background but had the kind of perennial challenge like all sales managers on how to lift productivity and so you know one thing led to another I had an idea and kind of a way we went but Paul how you you make it sound so simple an easy but there's a lot of you listening right now stuck not stuck in what they're making 300 ranting you're in a corporate job and they're so comfortable even if they have a bunch of ideas though they never actually will take the leap I mean what actually made you it sounds like this was a very cushy job what made you take the lead running sales organizations I think when you talk to the practitioners that are doing it and doing it for a living what you find is it's a unique function inside an organization and we are constantly constantly chasing the number and so at some particular point about four or five years ago I said you know what I just can't do this anymore I just didn't have the passion for growing and kind of running the same operating system for another organization so I you know again I'm a soft spot in my heart for sales reps and sales managers how do we lift their productivity and we headed down the venture path that's great now when when you quit the job did you kind of bootstrap this for the first couple years would you raise capital immediately I did okay bootstrap so my own personal money in there and so for hopefully my wife isn't listening probably too much money at college education is kind of in it and then finally she said you know how much money you actually have in this thing and I I kind of just you know glossed over it to a certain extent and then from there we began to raise capital how much have you raised to date about twelve million twelve million paid in capital today okay and when you say paid in capital is that because you're including like venture debt and other kind of forms of capital in the result no so we have a syndicate that we've raised capital from and that's the total paid in venture capital today but all equity no no debt no safe no no see yeah there's a little bit of debt you know here and there but you know nothing nothing material I asked if I'm seeing more and more folks that are raising venture rounds or then actually using that as leverage then go raise out cheaper capital from a venture debt from a tamiya or Hercules or lighter capital or scale works or these guys you've chosen not to do that no we actually have so we work with both Silicon Valley Bank and square one and so forth and we take out you know revolving debt lines and things of that nature just to you know protect the equity side of things yeah I think it's an absolute interesting you know strategy for organizations to take and I think the venture debt mark is becoming more more interesting did you decide to do it as a facility or not actually a term loan in other words could you take down all the money on the line up front and and pay interest or you just draw down as needed so we actually have a couple of different instruments but the one that we currently have now is is the former instrument got it that's great yeah but there are 7,000 different terms in that space and I'm trying a bunch of ours get a better grasp on what it actually means to take adventure debt because it's very they're very different all right very good to 12 million company at launch 2014 and what if he scaled to today in terms of total team is using you so there are probably now close to fifty thousand individual sales executives that are now leveraging commercial track okay that's great so fifty dozen sales execs and I do have a free plan we do not okay so those are all those all roll up into logos that are paying you something that's correct that's correct yeah we know maybe just given the fact that we're kind of by reps for sales reps and so forth we don't do away our software it's just you know part of the organization and maybe in the fabric or DNA at a company and in terms of number of logos not fifty thousand seats follow up on Barry's I think you said earlier the average team size was look call it a hundred so is it fair to say you got about five hundred Lola's working with you Oh roughly roughly probably a little lower than that because we tend to bias the enterprise segment and so you know larger companies with the granges of the world you know thirty five hundred sales executives ADP you know twenty five hundred sales executives that type of thing I see I see so I mean I mean are we talking way lower like a hundred or more like 400 or it's probably closer in two hundred ranges hundred range okay good so good very much very much Enterprise focused um let's uh let's shift real quick I want to understand how you're landing these kinds of customers so what's your team look like today yeah sure so we have kind of your classic sales distribution model lsaps distribution model so we have target segments and we've kind of gone through a bunch of modeling to identify what in fact is the most receptive segment and we leverage a number of different kind of social campaigns and marketing to try and soften those beaches and then we have a BER team that's calling into those organizations to schedule appointments okay break break all this down for a minute what's your total team size today so roughly roughly we've got about thirty five you know tone team members okay and how many of those are some kind of sales function roughly probably a third of those okay and everyone's in Denver know we have a couple of remote team members okay Denver and remote and then the cup I think you said a third of those so call it ten to the thirty five in a sales role walk me through out here I mean you've raised capital so I assume you've probably spent some that capital on scaling your sales organization how do you forecast things like ramp up period what's appropriate quota things like that yeah sure so you know it involves you know certainly as an organization that you know we've kind of our value opposition has always been aimed at targeting and lifting productivity of reps and managers how we've done that has evolved so in terms of the ramp up in terms of where we were of myself and co-founder were the first two sales executives and got to scale moderately quickly and then we kind of began to understand hey we need an out renew and grow these accounts mm-hmm and so that kind of began to shift the organization a little bit and probably over the last maybe call it 15 to 18 months really started to understand what the operating system and rhythm is associated to new hire onboarding and what those ramps look like now is that we have traditional quotas that can range depending on you know tenure of individual five to seven hundred and fifty million dollars in terms of net new product bookings and we can look to get somebody to scale into ramp you know arguably within a 60 nine-month timeframe II meant 750 grand and new AR are close right okay and that's annually or quarterly annually annually interesting okay good and then look backing before we go into some other unit economics backing up quickly is to get a general size I mean 200 customers 50,000 seats if I take that to inner customer as times your you know I think you said minimum a CV is called around 35 grand a year that puts you right now at about a seven million dollar run rate is that generally accurate yeah privately held company and so forth but it sounds roughly right let me let me ask it differently what makes you uncomfortable in terms of your stretch goal for the end of December 2018 what AR would you love to hit yeah what's the yeah sure sure so so in terms of where we are and how we think about you know communicating out to the broader community and I know that your constituency is as certainly in the investment side of the equation and how we do whether we beat that top-line number and/or depending on the shifts in the marketplace it's that's also Paul just real quick sorry it's less about like if you beat or not it's more about how you think about what that target is so what we're trying to do is we're trying to double the size of the organization every single year that's okay engineer - okay have you done that over the past year at call it 7 million or around that AR - AR today were you about half that taken back a year ago roughly roughly okay that's good and as most that growth come from adding on new logos or expanding teams you already had so it's it's a little bit of both and we've seen you know depending on the segment of the market again enterprise versus mid market we tend to have fewer enterprise customers than we do necessarily midmark just by you know by the size and nature of the market but we've kind of split it about kind of evenly in terms of net new growth versus upsell when a salesperson comes into your office this morning you know having this call in the morning and they sit down their computer how they know whether to focus their time on going after the new guys or adding 30 accounts to someone that already has a hundred seats yeah sure and so we've kind of separated those individual roles absolutely the vision of labor to try and make sure that you know our hunters are hunters and our farmers are farmers so that's interesting so you won't keep the same familiar face in other words the executive that closed the first seat will not be the one that's rep you know in charge of getting activation metrics hit and then expanding seats as you pass it off at some point we do now in the enterprise segment we will try and maintain some continuity of that relationship interesting interesting now you've studied this a ton you found that that's more effective in keeping the same rep on those accounts the whole lifecycle no question interesting why so certainly within the enterprise segment building that relationship in establishing that what we found is there's certainly an opportunity to grow and upsell those individual you know companies in the mid market where there's just limited opportunity to further grow the skill sets associated to hunting if I can use that vernacular sure it's fundamentally different than that of a Pharma yep okay interesting that makes good sense up let's wrap up here with economics real quick um you raise capital you also strike me as a guy that also obviously is paying attention to the books and not getting too aggressive how aggressive very willing to be in terms of customer acquisition cost you go up to you know one year ACV or we go up to 24 months what are you looking at yeah we try and keep it within the you know if we can beat to 12 month mark that's what we're targeting at and so I certainly consider myself to be one of the dedicated sales executives if you will so it does have an interesting way of actually shaping that number given the fact that i and cofounder are considered to be you know on the front lines with you yeah so if again just to make sure I understand if you're one a CVS 35-grand you're totally comfortable spending that to acquire them yes well yeah yes at a maximum at a maximum yeah so paybacks are below 12 months that is certainly one of the things that we're targeting yeah what will enable you to drive that sounds like maybe a little above that right now what will enable you to drive that lower just you know better conversion rates you know can we begin to execute in earlier top of the funnel stages better faster cheaper churn is critical in this kind of business what's your turn today and how do you think about it yeah so we ran into a little bit of a churn issue in our first kind of product which was a video based product okay and what we learned is there was an episodic nature to the product itself and so forth and that individual organizations weren't certifying on messaging on a weekly or monthly basis what we were finding is kind of trimesters to quarterly to maybe even semi-annually and so how do we begin to indoctrinate into workflow and it was through that that journey in those sets of lessons that we really figured out this manager effectiveness and how can we now begin to really understand how behaviors drive performance so what I mean what is your turn today and you measure it and monthly or annually we measure it monthly and we measure it annually and it's you know depends on you know the product that we have but you know we try and keep it in the single digits to the extent that we can't necessarily local so less than 10 percent you know per month and is that logo trying to revenue churn so we look at both of it you know we look at both the the dollar churn and we look at the logo cheering we also look at on a gross and on a on a net dollar churn mm-hmm but we you know we try and maintain somewhere in the in the low single digits or you know single digits on on both dollar and unit based yep when you look at you know a lot of people have troubles with giving getting to net revenue expansion being above 100 percent annually mainly because they don't have any expansion opportunities right you Kitt's impossible to go above a hundred percent if you have no expansion opportunities you've got a pricing plan in the form of CD expansion that allows you to drive expansion to cover you know your gross revenue churn so are you above 100% net revenue or attention annually today and if so by how much yes so yes is the short answer the question and I'm gonna stay in close the calendar queue to it was like one hundred and thirty five hundred four years oh that's great 135 percent net revenue retention annually correct that's how we came out of the second quarter yeah yeah yeah you're analyzing that cohort correct yeah that's great last question you're in economics a lifetime value can be dangerous because you can assume it's too long and then misguides you do you use that as a guiding kind of indicator for you or in you no good question you know I think we do that more when we're kind of talking to to the board and thinking about you know outside you know investors will look at the LTV component candidly it's not one of the things that we're actually using on kind of a monthly dashboard internally great let's skip over it then let's let's wrap up here with the famous five number one Paul what's your favorite business book my favorite business book probably right now is how to in front friends and influence others win friends and influence people yeah Dale Carnegie yeah good one number two is there a CEO you're following or studying currently you know I'm probably the CEO that I think I'm following currently right now is is a local CEO his name is Thad SP that runs on bud and I think he's a small entrepreneur that's just figuring out ways to drive innovation in the marketplace he's a local Denver CEO number three what's your favorite online tool for building your business besides your own probably I'm using an application called to-do list right now you know I read the checklist manifesto and certainly have an appreciation for checklist commercial tribe has an orientation around that number four how many hours of sleep are you in every night Paul I am now I just read the national Geographics latest edition on sleep and it's a it's a really really important thing on concentrating and getting seven hours 11:00 a.m. to 6:00 that's pretty good and what's your situation married single kids so happily married 20 years two kids one's a senior in high school and the other one's a sophomore in high school okay and how old are you I'm 48 okay last question what he was your 20 year old self new [Music] 20 year old self new was don't take it so seriously and how to how to get you know the best out of people guys there we have it don't take life so seriously focus on getting the best out of the people you know he had a lot of experience inside big sales organizations or relatively big sales organizations in the form of CEB and Gartner decided in 2014 you know I'm gonna do this myself things need to be fixed he now has 35 team members in Denver and other remote locations helping over 200 brands across 50,000 seats again build better and more efficient sales teams do it doing somewhere around 7 million bucks an AR today focused on doubling you over a year so about 3.5 million bucks in AR back in July of 2017 average ARPU or first year ACB is about 35 grand and he's willing to spend maximum up to that amount to acquire the customer so 12 months pay back $35,000 CAC again in the worst case really impressive numbers here in terms of revenue retention annually at 135 percent Paul thank you so much for taking us to the top do that