How Evotix Reached GBP 15M ARR and 40% YoY Growth with 160 People (Interview with CEO Matthew Elson)

Introduction and Company Overview

Nathan Latka

00:00Guys, evotix.com. They've grown from, call it, a $10 to $15 million run rate a year ago to now over $17 million. So call it 40% year over year growth. They've only added 10 extra people, so that's efficient growth. They've got plenty of cash in the bank, burning somewhere net burn wise, call it $100 to $200 grand per month with a clear path to profitability or breakeven midway through 2023 here. It's the definition of controlled growth, not

00:25irresponsible all out growth, burning millions per month controlled growth. Hey, folks. My guest today is Matthew Elson. He's the CEO of Evotix. He's transforming how companies manage health, safety, and risk and engage with their employees delivering safe, nurturing, and compliant workplaces. Matthew, you ready to take us to the top?

Matthew Elson

00:43>> Yes. I am, Nathan.

What Evotix Does and Who It Serves

Nathan Latka

00:44You were one of our top top episodes last year, and I think it's because you told the story of how you effectively bought software for, a dollar and then grew it to $14,000,000 in revenue. That is that is Evotix. Walk us through if folks missed that episode, walk us through what customers you serve and how they use you.

Matthew Elson

01:04>> Yeah. So we we serve mid sized businesses. We think of it as organizations of between two fifty and ten thousand employees, and we help them to meet their health and safety needs. So if you're responsible for health and safety, you need to record, investigate your accidents, you need to understand your risks and mitigations, your people are trained, your assets are inspected, your contractors are competent. Lots of our target customers are still doing that with pen and

01:32>> paper and Excel spreadsheets. Obviously, that's inefficient. It's difficult to demonstrate you're compliance and you can't really learn anything from your data. So customers are using our solution to capture store, organize their information, workflows to demonstrate compliance and powerful BI to slice and dice their data and know where the improvement opportunities are. But first the key thing, I was going to say Nathan, first the key thing is about engaging employees because you only get so far with

02:00>> health and safety with rules and procedures, right? So it's all about engaging your employees. So we're mobile first, very user friendly. We look to get our app in every employee's hands and embed safety at the heart of core operations.

Key Customers and Podcast Marketing

Nathan Latka

02:13GlaxoSmithKline, New Balance, you've got great customers. I also love it looks like you're onboarding new customers and marketing with your own podcast called two bald guys talking safety. Is that now launched and live?

Matthew Elson

02:26>> Yeah. Yeah. No. That's been a great marketing initiative. A little bit little bit of humor, little bit as as as you do with with successful podcast, but a serious message as well, and it's getting a great followership.

Growth Over the Past Twelve Months

Nathan Latka

02:39Well, that's good to hear. Now the reason I invited you back on is because we always do a survey of the fastest growing SaaS companies of the prior year, and you responded with some impressive growth. So help us understand what did growth look like over the past twelve months?

Matthew Elson

02:53>> Yeah. So we will end our financial year on about 15,000,000 of sterling of ARR.

Nathan Latka

03:01$15,000,000?

Matthew Elson

03:03>> 15. 15,000,000 pounds. Yes. And so that'll be 40% growth for us.

Nathan Latka

03:09So that's up from, I mean, call that what you were doing about 10,000,000 in run rate about a year ago?

Matthew Elson

03:14>> Yeah. Just over 10.

Nathan Latka

03:1610 a year ago. Okay. Very good. Now what drove a lot of that growth? Was it expanding into current accounts or brand new customers altogether?

Net Retention, Gross Churn, and Expansion

Matthew Elson

03:23>> Mostly brand new customers. So we've got pretty good net retention numbers. So we're at a 110, 115% net retention. So we're expanding existing customers, but the core for us is new logo acquisition.

Nathan Latka

03:35Pull back that onion for me. A 110 dollar retention is made up by looking at obviously gross churn annually plus expansion. What was gross churn before adding back expansion?

Matthew Elson

03:45>> Yeah. So we're churning back 5%, and so expansion then is is 15% plus.

Nathan Latka

03:53Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 interviews I've done manually, saves you a lot of time. Well, we've done this, we've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second. But you log in, you connect

04:17your Stripe account, you see your valuation real time, you can see what changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna get

04:41a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is not

05:03built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're going

05:29out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at, and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right. We're gonna go back to the YouTube video here in a second. But if

05:51you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link, this link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into the

06:17interview. And how have you oriented your expansion team? Are there a team of customer success reps with an expansion quota or how do you get that performance?

Customer Success Structure and Expansion Team

Matthew Elson

06:26>> Yeah, we restructured our customer success. So for us, the customer success is purely customer success, right? So it's about helping customers to get the maximum value from their relationship with us and using the solution. We then have separately a customer development manager role, which is about driving that expansion revenue. And for us the expansions come from additional seats, they come from new functionality because we're modular solution they and come from expansions where we've got into a

06:55>> division or geography and we're able to go kind of company wide. Mhmm.

Nathan Latka

07:01So just to be clear, your success team has no responsibility for driving upsells. The customer management team does.

Matthew Elson

07:08>> Well, everybody who's in part of the part by the customer success family, of course, has a role in making customers happy and happy customers buy more. So in that sense, yes, all of our customer success teams have a role to play. But in terms of the actual commercials and driving the commercials, it's with the customer development managers who sit within the new business team.

Nathan Latka

07:30Okay. How many customer developer managers do you have?

Team Size and Headcount

Matthew Elson

07:34>> We got three.

07:35>> Three today.

Nathan Latka

07:36And how big is the

Matthew Elson

07:37>> total and then we've got a couple of sort of BDR equivalent roles.

Nathan Latka

07:40And how big is the full customer success team today?

Matthew Elson

07:44>> Customer success team is about, I'm gonna say, 35 probably.

Nathan Latka

07:47And then what's total team size?

Matthew Elson

07:49>> Everybody at company. Yeah. But within within customer success, I'm I'm including customer success managers, support team, implementations consultants, solutions consultants.

Nathan Latka

07:59Mhmm. And what's the total team size?

Matthew Elson

08:01>> Is a hundred and hundred and sixty.

Nathan Latka

08:04160. Okay. So you've hired about 10 people since we last chatted back in July. Mhmm. You told me back then revenue was about 14,000,000. So you've added about a million bucks of run rate run rate. Is that accurate?

Matthew Elson

08:15>> Yeah. I think July may have been $14,000,000. I'm now saying £15,000,000. So there's difference there.

Nathan Latka

08:22Okay. Sorry. When you told me you're finishing with 15,000,000 this fiscal year, that was pounds or or or US dollars?

Matthew Elson

08:28>> £15,000,000.

Nathan Latka

08:29Ah, okay. So that would be, what, 7 17,000,000, something like that?

Matthew Elson

08:33>> Something like that at the current exchange rate. Yeah.

Nathan Latka

08:35Yeah. Okay. Interesting. So $17 million in ARR, 160 folks on the team, 10 new hires. You got the CS role cranking. Talk Talk to me. You mentioned one of your key things in terms of upselling is obviously, you know, they're buying new features, right, or new functions is what you said. What are what are some new features you've built over the past six months that is enabling you to drive and sell into new functions?

New Product Features Driving Upsell

Matthew Elson

08:57>> Well, mean, it's that the initial purchase tends to be a more limited set of functionality. So instant risk audits, and then we have other modules like people in training, assets, contractor that people buy. But a lot of our upsell is being driven by solution which we call learn. And that's about embedding rich content in day to day activity. So your classic kind of LMS is a classroom experience, right? You go and you study it and you

09:29>> maybe do some quizzes and you demonstrate that you've done your studying. We're embedding micro video in day to day workflows so that imagine this use case. Right? So I'm a I'm a an engineer. My job is to is to overhaul this piece of equipment, and I haven't done it for six months. What do I do drastically?

Nathan Latka

09:53You're talking physical, you're working on an assembly

Matthew Elson

09:54>> line, I'm something like on an assembly line, right? Exactly. I'm the plant, I'm doing an overhaul. So, what would I do traditionally? Well, I'd go to the filing cabinet, I'd get out the file, hopefully I'd read some of it, you know, maybe I'd fill in a paper form to say that I was ready to go. Imagine how much more engaging and compelling that is if I go to the machine with my tablet, I scan a QR

10:15>> code, it shows me some video and some diagrams, I do an online quiz, I do a point of work risk assessment, I do my lockout tag out and off I go. And so you can see that we come at that from a safety perspective. So for us that's doing the job safely, but actually it's doing the job effectively. So that's putting safety right at the heart of core operations. And that makes the solution very sticky because

10:43>> it's an operational solution and not just a sort of a compliance solution as some people might think of safety.

Nathan Latka

10:48Now, just to be clear, I mean, you working mainly with, you know, you have a bunch of industries that's on your website. Is the biggest one manufacturing in terms of what represents the most revenue?

Industry Verticals and Revenue Mix

Matthew Elson

10:58>> Yeah, manufacturing is the biggest, but that'll be about 20%. So we've got pretty good referenceability across a number of sectors.

Nathan Latka

11:06What's the second biggest?

Matthew Elson

11:08>> Manufacturing, construction, transport logistics, food and drink, retail, municipalities, housing. That those were all we've got great referenceability across all of those sectors.

Nathan Latka

11:21And just to be clear, it's not just like, hey, work on the assembly line, watch the safety videos so you don't break your hand in an assembly line machine. It's also mental health as well. Right?

Matthew Elson

11:31>> Right. So so it's about more widely, it's about engaging employees and giving them a safe and healthy environment. So, you know, we can all see the kind of ESG agenda, right? The ESG agenda, people have different views, but there's a reason why we're talking about ESG, right? Which is that we expect organizations, companies to be good, responsible corporate citizens. And part of that is about looking after their employees, keeping them safe, but also looking after their

12:04>> mental health and their well-being. You know, some of the biggest challenges that companies have is about engaging with their employees, ensuring that their employees are happy, competent to do the job, effective. And particularly with the rise of remote working, kind of that division between home life and office life is breaking down. And so more and more organizations see that they've got a role in kind of helping employees to lead fulfilling work lives and social lives.

Macro Environment and Capital Efficiency

Nathan Latka

12:42Let's go macro here for a second. Since the last time we chatted, interest rates have gone up 4%. Equity markets have basically shut down. And, you know, what what I like to say is the capital efficient founders are the ones that are gonna survive. Right? So you are very, I would say, capital efficient and very creative, especially considering your origin story. I think founded in 1995 as She Software. You got I forget how you got involved,

13:04but you took it over eventually. And then I think you went out and did a a 6,000,000 series a in 2018, a 5,000,000 series b in 2020, and at a 50,000,000 valuation. What are you seeing today in terms of valuations?

Matthew Elson

13:16>> Mean, it's it's really hard to say, isn't it? I mean, obviously, the public markets are way down. My reading of it is that solidly performing SaaS businesses are still getting good multiples and

Nathan Latka

13:30and What does that mean?

Matthew Elson

13:31>> Are you solidly performing?

13:33>> I I'd say that we are. Yeah. I mean, we we we've got a very strong track record of growth, high retention by all of the SaaS metrics that you'd like to look at we've got great performance on. And so, you know, we're not one of those 200 to 300% growth but burn a lot of cash businesses, right? We are, you know, in the kind of, we're obviously in the growth above the value universe of of investments. But, know, we're

13:57>> we're demonstrating that our growth is clearly creating value for investors and creating a a strong and sustainable business. Mhmm.

Cash Burn and Path to Breakeven

Nathan Latka

14:08And so are you guys profitable today?

Matthew Elson

14:11>> We we're slightly cash burning, but very much controlled. And obviously, in the current environment, we're very much keeping an eye on that. So we will be Yep. Cash breakeven by the middle of next year. Well, middle of this year rather than next.

Nathan Latka

14:24And when you say sort of controlled or manageable burn, I mean, we talking, what, like a $100 net burn a month or, like, a million net burn per month?

Matthew Elson

14:32>> Oh, closer to a $100 than the million. Right? And we've got we've got we've got plenty of cash on the balance sheet to see ourselves through to to break even.

Nathan Latka

14:40How how so I guess, how do you define plenty of cash on the balance sheet to get through to break even? Is it a number of months of runway? And if so, what's the number you're optimizing for today?

Matthew Elson

14:49>> Well, given that given that our cash burn is is declining, right, we've got enough cash to to go through to breakeven. So, you know, in that sense, right, the the burn rate isn't an issue.

Nathan Latka

15:01Yep. And so and you think it's gonna take you about twelve twelve to sixteen more months to get to breakeven?

Matthew Elson

15:07>> No. No. I said it's the by the middle of this year.

Nathan Latka

15:10Oh, this year, not next year. Middle of this year.

Matthew Elson

15:11>> Okay. So I corrected myself because, of course, we're now into January.

Nathan Latka

15:15We are. Welcome. Happy New Year, everyone. Welcome to 2023. So alright. So if you're burning a $100, $200 a month times six months, you know, you're basically saying you've got more than $1.21.0.5, whatever million in the bank. You feel very good about that position.

Matthew Elson

15:28>> Yeah. Yeah. No. And we we we we've got plenty of cash to to to trade through. Yeah.

Nathan Latka

15:32Matt, what about the other side of this? Right? I mean, in a recessionary period, creative founders like you can excel. You've already proven your chops in terms of deal making. I mean, are you looking at rolling up other EHS companies right now, and how do you make sure you stay creative?

M and A Strategy and Acquisition Appetite

Matthew Elson

15:47>> No. We're not we're not we're not fundamentally looking at sort of an industry consolidation play because I think the technical integration, you know, it's a big diversion. It's a tough job already growing a company fast without facing that. But we're interested potentially in some

16:08>> we could do some sort of bolt on technical acquisitions where there's interesting technology out there, particularly, you know, around image recognition.

Nathan Latka

16:17Would you target, like, two to three person tech teams pre revenue so you're not paying some big financial model?

Matthew Elson

16:22>> As Think of sort of think of it as as tech acquisition and a bit of acquihire.

16:26>> Yep. Yep. Alright.

Plans to Raise Capital

Nathan Latka

16:27That makes a lot of sense. Well, we're rooting for you now. Any plans right now to raise capital? Do you have term sheets from anybody or no?

Matthew Elson

16:33>> You're good? Nope.

Nathan Latka

16:34Nope. We're good.

Matthew Elson

16:35>> Alright. Very good.

Famous Five Rapid Fire

Nathan Latka

16:36Matt, on that note, let's wrap up here with the famous five. Number one, favorite business book?

Matthew Elson

16:41>> The the hard thing about hard things.

16:43>> Yep.

Nathan Latka

16:44Number two is that by the way, you're consistent. Same same answer as seven months ago. Number two, is there a CEO you're following or studying?

Matthew Elson

16:52>> Yeah. Not not nobody specific just now. I mean, looks at Elon Musk, but not not not to follow his he not not to follow his playbook.

Nathan Latka

17:02Number three, what's your favorite online tool for build building Evotix?

Matthew Elson

17:08>> So I think I said last time, 15Five, which is a a great tool for employee engagement.

Nathan Latka

17:13You did. David and his team over there are doing a nice job. Number four, how many hours of sleep do you get every night?

Matthew Elson

17:19>> About eight.

Nathan Latka

17:21That's good. And situation, married, single, kids?

Matthew Elson

17:24>> So I have a partner and a stepdaughter and a and a grandchild.

Nathan Latka

17:30Oh, that's very exciting. And did you have a birthday or you're still 56?

Matthew Elson

17:34>> No. I'm I'm I'm 57.

Nathan Latka

17:36Happy happy late birthday. Last question. Something you wish you knew when you were 20.

Matthew Elson

17:44>> I think that, you know, there there's no need to rush things. Right? That you you you build your experience over time. You you you keep your eye open for opportunities, and that's how it all comes together.

Nathan Latka

17:57Guys, evotix.com, they've grown from, call it, a $10 to $15 million run rate a year ago to now over $17 million. So call it 40% year over year growth. They've only added 10 extra people, so that's efficient growth. They've got plenty of cash in the bank, burning somewhere net burn wise, call it $100 to $200 grand per month with a clear path to profitability or breakeven midway through 2023 here. It's the definition of controlled growth,

18:22not irresponsible all out growth burning millions per month controlled growth. We're big fans. Matthew, thanks for taking us to the top.

Matthew Elson

18:29>> Yep. Thank you, Nathan. Bye bye.

Nathan Latka

18:31One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday one

18:56p. M. Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at two p. M. Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's

19:17an acquisition, a big fundraise, a big sale, a big profitability statement or else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people

19:39are saying. Sign up for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode and if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to

19:59counter those people. We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.