Eptura Revenue & Funding (2024)

hello everyone my guest today is Paul Statham he is the CEO and founder of a company called Connect Oh group he has established several successful and innovative businesses helping shape the relationship between real estate technology he's established conduct go as one of the foremost providers of workspace management technology and leading the company through a successful 30 million dollar series a round he was previously managing director of one of the UK's largest electronic security companies Paul you're ready to take it to the top you know I mean they all right tell us about the company specifically what you do and what's your revenue model how do you make money right we are a software primarily a software business we've run a subscription software solution that we supply to the enterprise corporate market which is to provide scheduling and reservation system management and you can work space utilization and walk me through the revenue model so is it kind of a pure place ask modelers are consulting professional services mcdale we run we have we have three parts for our business we run a assess element we run our services and consulting element and we also run a propulsion of hardware we matriarchy manufacture our own digital signage that goes outside of people's meeting space and on people's desks so we manufacture that as well so it comes in three different levels and breaked it's over the past 12 months break down the revenue percentages of each of those which one is you know 50 60 70 % etc we do about 45 percent of our revenues now through our subscription about 20 percent is through services and the rest is through halfway god are interesting now does the hardware obviously once you get installed does that create some nice lock-in so your retention numbers kind of go up through the roof yeah it's you know we're very we we had great retention we're a sticky product once people have invested capital into the hardware you find that they you know they they stick with you but they Steven the guys that don't use our hardware you don't have to use the hardware yeah we still have a 95 percent retention rate which we're very pleased with and is that that's 95 percent grosser net retention that's logo attention how gross gross ernet scruggs okay lily and our net we change is about one hundred and twenty two percent okay that's on I guess revenue basis I kind of emulate yet yeah that's great and that's annual yeah that's great congratulations um let me let me just I'm gonna dial back up from the numbers for a second so when people go into like a like a we work and they see kind of a sign that I of each meeting door that are like electronic and you can use an app to kind of book them and stuff is that you behind that we the that's what we my there are others on the market but we are considered to be one of the first one of the market the principal minors in market and give me a general sense I know you probably have a lot of different cohorts of customers but on average wondering that what are one of these companies paying you let's just focus on the sass revenue so on a monthly basis I varies wildly we have our probably our smallest Sassy's paying us around a couple of thousand dollars a month than our largest could be paying us thirty forty thousand dollars a month and what's what's the difference between the two is just number of locations or what makes are different with our revenue our subscription model is based on the number of rooms and desks that we have managed within our system okay and and so get let's go micro for a second so what do you charge per room or per desk it varies wildly but but depending on the size of the scale but somewhere in a few hundred dollars it starts had a few hundred dollars a year second start as low as as thirty forty dollars a month if you have it with all of the additions with signage and screens it can go up to maybe seven to eight hundred dollars a month a year okay so just I want to make sure nurse Innes let's say I'm like a solo I'm a single company and I have two offices in my in my building and there are three desks in each office I'm gonna pay a couple of hundred a hundred a couple it sounds like I could pay maybe grand or two grand just to manage those two offices for a year is that accurate if you had three three meeting spaces and you wanted signs and to manage those rooms those meeting rooms it would cost you around for those three meeting spaces question about $900 for the year including the halfway okay okay guy that's that's okay that's reasonably priced great and in one way through the back story here let's put us on a timeline when did you launch we launched in 2005 so we've been about well and and where were you personally at that point or did you join the company at the series a level no I was the founder of the business I founded the business back in 2000 when we were doing we weren't we were doing software development and we developed the Kundera product in 2005 and launched dear so I'm being with the business since the get-go so from 2000 2005 where I mean we're running essentially an agency and outsource dev shop and then you said Oh a lot of people have this problem let's go all in precisely absolutely that's exactly what happened we were you know we had we came across the the problem on the number of times we built a great solution and when guys this is a this is this is a winner and we pushed on in 2005 and dropped the bespoke stuff that was was going on at the time good for cash flow but a distraction once you have a SAS company totally and completely yeah we started life back in the day as a perpetual license company we migrated in 2015 to entirely SAS we've never looked back painful times but it's it's a it's a Socratic place and what have you scaled to another today in terms of total customers using you [Music] our total customer base is around 1200 okay okay so is it a note and as the sales process of no touch or is a pretty high touch of a big inside sales team now we have a we have over you know total sales team sales and marketing accounts for about a hundred people within the business we have a ten man inside sales team we have a 35 man outside sales team we have channel teams we have marketing team so we've got quite a big organization behind our sales or not what sort of team size 400 400 more everyone in London no we've got London accounts for about 120 of our members of staff our team we've got a large development and implementation center that is in Google in India and we have offices we have 11 other offices around the world we've got offices in California in New York across Europe Singapore Australia so we got we've got a wide range of we cover globally and give me a sense of kind about this at this scale you're at today what are you growing at year-over-year we're going around just under 30% you and yeah and now SAS revenue is growing at around 40% new and yet that's great nn you said you raise capital so how much have you raised today we raised thirty million with with Highland Lindsay on the capital yeah that's the only capital we were we were bootstrap for the first 16 years of our life and we then because of our expansion was just getting so great that we we took on some capital from Ireland Europe and that's been a great a great addition to our our business you turn to the dark side you couldn't resist it huh I turn to the dark side but I tell you what I love every minute of it now we're there it's it makes our growth even stronger so it's a great place to be did they prefer you or did you pursue them that you firstly pursued us we didn't ran a process through KPMG and we selected actually selected Highlander who had approached us previously because they really understood our business a small relatively small business a company in based in Europe and and really really you know got to know us quite well over the period and yeah as I say that it's been really good you know confidently reference the dark side but we found it to be most certainly very very insightful that's good now poff I took that 1200 kind of customer count you gave me and you said your minimum contracts are caught in a three couple thousand range I mean if I take three grand times twelve hundred that'll put you around three four million bucks per month right now in revenue is that generally accurate yeah we have about about four million bucks per month the mouth yeah that's great what um when you that's it's pretty impressive watch I want to take that back when did you raise what was the month we're anything June 16 June 26 and what was revenue at the point that you raised about 15 million dollars twelve twelve million dollars oh wow so you've almost 3x over the past six over the past 16 months or so with the money yeah yeah yeah we've grown rapidly during that phase I yes we have 15 million dollars back in the double yeah I want two things I want to get here one is that's incredible growth right bootstrap to get to fifteen million but it's also incredible how you've been able to you know bug people say yeah give me capital I can use it to drive growth and then the pro formas never check out you it sounds like you were able to spend it and the pro formas are checking out I want to talk about both so how are you you know pre-funding days how are you operating the company in terms of team size in terms of what your sales organization looks like and how you thought about CAC and payback on your new customers okay pre-funding we were we were running very tight you know we we were investing everything back we were running our pre funding we were still running through perpetual relicense days so you were it's a high profit lower recurring revenue and therefore we were still able to focus on on customer satisfaction we ran about a team of probably in the region about 70 people okay maybe people and it's we were still a client size we've probably only around three or four hundred clients and they're suddenly obviously we've expanded and the company's grown significant yeah now that was 2015 oh sorry 2016 15 million ar today you're at you know north of 45 million in AR it sounds like take me back through a year so in July of 2017 or August 2017 what run right you're at you know the exact figures but let's put it somewhere in the region of around 8 million and you run right recurring around you're weaker okay wait I'm confused I thought you said a year before that in June 2016 you were doing 15 million revenue of total revenue oh I see I see what was what was just SAS revenue in 2016 run rate ah it's a seven you in 2016 was probably around the probably six seven million dollars six seven okay and then a year later you grow that to eight yeah you know a year later we grew that too we doubled it we grow to 12 okay that's right that's what I just asked so sorry June of 2000 June 2016 6 million pure sass a our run rate a year later and June July of 2017 I thought you just said 8 million but no you're saying it's 12 yeah that was true you said in August you said August 16 which was just after the investment in June so my fault yeah July 12 you marked up yet July was then named rain and we've been growing an arrow everyone rate is in dollar terms he's it's yeah he's browning just out for 30 million if we running at the moment and that's just SAS revenue there's just recurring revenue subscription revenue guidance comes out that's about 2.5 million a month you're doing 4 million total per month so you still have a significant portion call it 1.5 million a month coming from these other service lines hardware professional services yeah do you did when you did Highland beat you up over that do they say hey Paul we can't give you the evaluation you want so much of your revenue is professional services and that's crappy margin [Laughter] professional services with discounted but their hardware because we manufacture it ourselves and it's got some unique properties within it our gross margin on our hardware is very much quite quite close to our gross margin on our software so they were very happy with us in the hardware market well that's great because most most software margins are called 8 gross margin to 85 ish range if you can produce art we're at that at that rate that's a healthy production cycle we're not quite we're close but we're not quite there but we got a good gross margin on tell me more you know we've had a few people on that have a hardware plus software component once it come to my ear Eero which is obviously home Internet plugins and other things another is a purple Wi-Fi there's a Wi-Fi install into airports and there's a software service on the back end of it talk to me right now what is your or how has that affected your turn and retention rates in other words if you take a cohort that has the hard your hardware versus doesn't have your hardware one is that possible to have not have your hardware and still use your software and if so what's the difference in the retention other su cohorts the it is possible to hangout software without hardware only 50 percent of our clients use our mark we're the best software and our attention is similar on both we have a simple number hmm yeah the song is the software drives this hardware as opposed to the hardware driving the software so people buy our product because we're a software company which is and echo software our hardware is an add-on so the value is that we produce you know one of the the best and well respected products in on the globe that does scheduling for meeting space so people come to us because we've got that that reputation mother is there anyone that uses your hardware but does not use your software no we we don't so we don't sell our hardware without and software offering to run because the out software runs our hardware so it they come as one on the same last few economic questions kak what's it costing you fully waited to acquire a new customer it's a it's a calculation that we're currently we are working on because of the different calculations a Franky's is running into around the way we calculate it we end up with a round tank of about 1.2 1000 1200 yeah okay to acquire a $3,000 a month customer no no no - it's because it breaks down we're now breaking account down for our enterprise customers cost as more so he averages so if you break it down on a contract equation for each room it's around for a $300 a year room cost of acquisition is coming out around $200 Turner okay got it so you're paying what your payback period then you put it out with nine months ten months eight months eight months nine months that's healthy no has that generally grown that's gotten longer since you raise capital you're getting more aggressive it's yeah it's probably a little bit longer but it's not hugely long of a little bit longer yeah I think we were as I say before the capital we were very potential based so it's a different different payback because the payback is is significant a lot quicker so yeah do you do you see that payback period is the same across all your cohorts so if someone you know three grand a month you're spending about three to grand times the eight months so about twenty four grand to acquire that customer if someone is it's not lenient know if someone has got thousand rooms then our payback is is actually a lot of considerably better than if you've got one or two rooms because although it takes longer to do it the value is is significant it makes good sense let's let's jump in here and wrap up with the famous five number one what's your favorite business book famous business book is the second Machine Age I think is really relevant to our business and it's it's it was it came out in 2016 and I think it really set the tone for where we're going with robotics and AI and it's it's one that I probably many times over the last two years number two is there a CEO you're following or studying right now nothing number four what's your favorite online tool for building your business I'm two tools I'm an old school so email still with is the center of my world but Salesforce is driving our business unbelievably so that would be my number one but I do love emails field so number four how many hours of sleep to get every night seven and a half it's pretty good and what's the situation married single kids married yeah yeah I'm 52 years old I'm married have been for for almost 25 years and got three children three kiddos okay last question what he was your 20 year old self knew as much Apple stock as I could have done at the time would have been the first thing I've done but in a business perspective I think to to actually be more strategic and less tactical back in the day I think you start off like very tactical in the way you do things and as you get bigger and grow you realize that the strategic is the way to grow and I think that's the thing I would learn to be most ready for Tiki be more strategic and less tactical in 2000 he started basically ramping up kind of a dev shop in an in the agency format doing kind of one-off projects then realized wow a lot of my customers have this problem with managing their rooms imagine their office space so in 2005 formally launched his product can deco today they serve over 1,200 customers all their rooms right manage with a piece of hardware in many cases about 50% of the customers buy the hardware each customer pays call it 3ish grand per month they're currently doing about 2.5 million per month in pure sass revenue for million per month in total revenues so healthy numbers their growth rate about 40 percent year-over-year growth a year ago today they're pure sass revenue was about 12 million bucks again that's now up that's our about 1 million a month now at over 2.5 million a month retention metrics super healthy 95% annual gross retention net revenue retention 122 percent annually again building a software esteem of 400 between london india and other remote locations paul thank you for taking this to the top thank you very much