How Derive Systems CEO John Oechsle grew Derive Systems to $60.2M revenue and 50 customers in 2024.

hey folks my guest today is john o'shaw he's the ceo of derivet systems now he may look familiar because he's been on the show many times with a different company swift page we'll get that story in a second he's now focusing on vq efficiency for engine calibration slight difference slight difference from swift page john are you ready to take us to the top i'm ready man good to see you so how do you go from swift page to engine calibration you know the underlying factor there is technology right so as long as you come out whether it's crm or auto tech you know it's all it's all about bits and bytes uh you know for sure but uh yeah i know i mean we were script page for a long time and really really had a lot of fun growing uh growing that business we sold that off to sfw capital and uh at like mid 2018 i kind of stayed on as ceo for about a year and a half to help with the transition we put steve auriola in in the in the seat there and then i transitioned over to uh to the board uh officially at the end of 2019 and because i i just can't sit still nathan i i had to you know do something else i ran into a private equity firm called global environment funds gef and they had derived systems and um they uh somehow convinced me to uh to come on board and as we were talking earlier my first day on the gig march the 16th 2020 and if everybody remembers that that's you know that's when we said hey everybody lock ourselves in a room and three for three weeks and we'll flatten the curve uh so i walked in the door and everybody said hey i'm john everybody go home let's unpack this story here real quick so 2018 you sold swift page now were you writing swift page on behalf of a private equity firm or did you own a majority of that business um we we were running uh yes we were running at on on behalf of a private equity firm a couple a couple firms uh excel kkkr jump capital uh were were the main players in uh in swift page at that time and so just to close out that story what did you guys sell it for to sfw um i can't give you the exact number but i will tell you that everybody was extremely uh extremely extremely happy can you give me a massive range that won't get you in trouble above or below 100 million uh let's just say uh 100 million is yeah yeah the answer is yes yeah somewhere in there okay all right so you're in that role yeah so john you're super active in the colorado sort of startup ecosystem is that how you came across gef how'd they find you you know uh they they found yes i mean i i'm connected with uh the startup world uh for sure i'm connected with a ton of private equity uh firms and and as a very ancestral kind of uh group uh you know one firm will be talking to another firm and said hey you need to talk to this uh you know to this guy etc uh and that's how i ran into uh into gef so they why do they make a connection and say well this ex-crm and on sales automation guy will be a great thing to put on derived systems how'd that connection happen you know it's about leadership uh quite frankly uh you know if you look at drive systems derived system has been around for a long time so it's not a startup it's probably not much it it actually uh gef launched this in 2013 it was a combination of a couple different companies coming together so i'll i'll give you that uh story here in a second but um you know it had gotten to a point where it had lost its way and you know what i'm known for is a leader that comes in rapidly understands what's going on rapidly understand what what needs to be done to fix it and then more importantly rapidly putting in place a plan to grow it uh and and increase value and so you know that that's how they came up across me and they said you know are you up to the challenge and i said oh my god absolutely uh this this is uh this a lot of fun but um you want to want me to give you the 30-second uh history on on well let's talk about the product though quickly first because you have three product lines that this sct product a thing called bully dog and then derived vq just i guess who first who is the buyer who is buying this stuff so let me let me give you a quick lay to land derive think of drive as a company with two business units and three brands our two business units are the enthusiast business unit so that's any car enthusiast so if you've got a mustang or you know a jeep or a pickup truck etc and you want to tune it and get more power out of it etc that's what's called a car enthusiast and so that's one business unit and then the other business unit is the enterprise business unit which is more corporate fleets and fleet management etc and then as you mentioned the three brands sct who would be that what's an example of corporate for like mcdonald's delivering like trucks you could do that but you know our one of our largest customers is comcast right they have 26 000 vehicles in their fleets you probably see them driving all around the the xfinity uh little vans and pickup trucks that you know etc uh verizon is another one safe flight yeah you know you can kind of think about that amazon's got huge deals your product they're using it to get better gas mileage or better route plan or what so in in the enterprise space um the vq platform the brand vq platform has three applications that hang off of it vq efficiency which is one that we're getting the most traction in the market right now um vq telematics and then vq safety so let's let me talk about vq efficiency and what we do there is we actually tune the engine to get the maximum fuel efficiency and the maximum uh carbon reduction we can also set speed limiters and and things along those lines so a company like comcast is got you know that that portion they've got our entire platform but just on that portion alone they're saving eight and a half million dollars a year on fuel but more importantly there's 24 000 metric tons of carbon that they're eliminating from the atmosphere uh or from the environment every single year so you're hoping to meet their esg targets then absolutely you know you know who's our buyer most of the time on that side is it's the fleet operator but we're also getting you know the corporate risk officer and the chief sustainability officer that uh you know are contacting us to to help them out efficiency vq telematics are you familiar with telematics i mean that's been around for forever right i mean yeah we're not a televised player we don't have telematics software what we do is we integrate with all the big telematics players out there the geotabs experience the fleetmatics etc we actually use them as a channel to get to the customer um and uh and so we're we're kind of an open platform on that side we have a very light telematics platform that if somebody doesn't have something you know we can put in place but we're that's not where we really compete and then vq safety is really going after two other big issues that these fleets have and that is speeding and distracted driver and so we have a distracted driver prevention application and we have a dynamic speed control where based upon where you are like if you're a fleet operator you say hey i don't want my uh fleets to go any more than 10 miles over speed limit no matter where they're at um and we're able to dynamically understand where you're at to be a gps understand what the speed limit is and then set it so that your vehicle if you go over that 10 miles it's a very very annoying uh thing for for the driver to kind of quickly break down the importance of these two cohorts car enthusiasts and enterprises in terms of your your top line revenue last year what was the revenue split between the two um so revenue is 75 25 right now so think of it think of the enterprise 75 enthusiasts 25 uh enterprise right so just to give you an idea um we're this year we're on track to be about a 55 million dollar uh company and that split is still going to be the same of 75 25 this year um the challenge is is that uh you know the enterprise business is a rapidly growing business uh and that's going to take off like crazy right so what is it if you do 55 this year joel what would that be up from last year uh we are going to be right now first half of the year we're up 35 percent year over year i'm sorry i was just on with another founder named joel and i obviously knew john here but so up 35 so what you finished last year at around 40 40 million something like that yeah a little bit yeah a little bit more than 40 million but yes and how much that is software um almost all of it is uh is software uh we do have devices that we sell that but the device is only used to deliver our software so on the enthusiast side we sell these devices right um and you use that to plug into your obd2 port but that downloads the software and it's a piece of hardware i'm sorry how much is that piece of hardware how much is this is the hardware yeah if a car enthusiast wants to use your software they have to buy the hardware how much is the hardware it ranges anywhere from 299 to 499. 299 yep to 499 interesting and do...