How Executestrategy CEO Tom Wright grew Executestrategy to $5.4M revenue and 1.1K customers in 2018.

hello everyone my guest today is tom wright he's the founder of cascade strategy after seeing firsthand how bad most organizations are taking all right taking their strategy from powerpoint to reality he wanted to see if he could bring an affordable technology solution to solve the problem to market tom are you ready to take us to the top absolutely all right cascade strategy tell us what the company does and what's your revenue model how do you make money sure so it's a b2b sas model um so we have an online sas platform called cascade and what we do is we help companies uh turn strategy from being something that's very conceptual into something that they can actually measure tie back to performance link revenue goals to etc so it's everything from the planning of the strategy the day-to-day management and then all the dashboarding and tracking solutions around that plan as well and then kind of how do you price is it pure play sas yeah so it's 100 sas so it's a monthly uh software subscription we do annual as well um so you can kind of get started from as little as like 26 bucks if you're just an entrepreneur look for a place as your strategic plan online through to our kind of largest enterprise deals that are sort of you know six figures plus that's great and help us understand so like i know you have a huge cohort but on average what are customers paying per month for this yeah so the average of our new deals at the moment is about six and a half thousand uh dollars a year deal size but it is a really really broad range yeah yeah when you look at so ignore new deals because obviously people usually have legacy people that are paying much much less if you just look at your total base to date what are they paying on average per month or a year yeah so they pay about um it's probably just under 5k on average across the place right now per year okay so you haven't you haven't moved your price point upstream too much uh no we did we start off at about um 20 bucks a month and then for enterprise customers now we're charging about 48 so we have doubled it um the business model has evolved a little bit originally we were kind of shooting for you know really really large organizations bringing on kind of like thousands of people in one go from the start what we do now is we actually we still target fortune 500 companies but we actually kind of target teams within that and then we try to do the land and expand strategy where you grow organically once you've got one or two divisions on board yeah what are your geological company in uh technically it was 2013 um but we didn't really get the office until about 2014. okay 2013 that's great and then what have you scaled to today in terms of total customers on the platform so we just hit last month a thousand uh customers um so we're up to about 1076 now um so it's growing pretty quickly um so yeah about a thousand customers and we were growing at about from a revenue perspective we're growing about 150 year-over-year our revenue which we've done for the last couple years that's great we think we can probably do that for the next couple years as well yeah that's great i mean look a thousand customers paying kind of five thousand obviously kind of per month again kind of back into mr you're doing like 450 grand a month right now something like that yeah that's about right yeah it goes up and down obviously but um yeah that's about right and then take us back a year which obviously we can back into growth rate from this but a year ago what were you doing per month well i mean like say we're growing between 150 and kind of two hundred percent so like 180 200 grand a month yeah exactly we're certainly a lot less than we are right now so the last couple years have been pretty um pretty crazy for us where's most that growth come from you know charging old customers more so expanding or adding new customers entirely most of it does come from new customers um so we have we have pretty interesting um retention stats so we we kind of retain about 90 of our what we call our enterprise accounts and enterprise account is probably anyone paying kind of more than say 2 000 a month so sorry 2000 a year we would class as an enterprise account um so we tend to retain about 90 of those um in terms of regulating we annually yeah um our revenue retention within that group is about 120 so we do get organic growth within that population um it's not kind of like explosive we're not like doubling you know the the revenue from existing customers but it has like a relatively healthy uptick um but most of it does come from from new enterprise so tom peel back that 120 net revenue retention onion for me there's obviously gross churn and then your expansion makes up that gross to get to 120. so what is gross revenue churn per year um so like gross revenue churn is probably it's probably equivalent to that roughly like 90 so what what will that's your tension yes a 10 gross return and then that would mean you're expanding by about 30 to get to 120 net that's about right yeah interesting very good and then how are you up selling like how are you driving that expansion what's the what are the pricing axes so it's a it's a per um per user price fundamentally we do do like unlimited pricing models for you know mid-size organizations we don't tend to do them for the really large ones because you know we've got clients like johnson johnson bank of america really really big customers where unlimited pricing has an unknown risk factor um but mostly it's about getting let's say a general manager within a fortune 500 company maybe he or she has a team of say 50 or 60 people whether they're product managers or whatever getting them to deliver at least one quarter of really provable growth that they can tie back to cascade that's obviously tracked in cascade using our dashboards and things like that and then actually getting them on board to kind of go on a road show within the organization and basically use them as a kind of internal sales engine so it's we try to keep it as low touch as possible like we don't like going on site with customers obviously we have customers in 68 countries so that kind of can be quite challenging um but if necessary we will kind of go side by side with those general managers and actually present cascade internally um as a tool that's solved a particular problem in a very tangible way yeah that's great to get a new five thousand dollar your customer what are you spending on kind of fully weighted cat will you spend the full five grand um no so the vast majority of our marketing is inbound so we have like a pretty good um kind of like presence on google if you if you search for google things like how to write a vision statement how to create a strategic plan really generic strategy terms we're pretty much number one for almost all of those terms uh with our blog posts our ebooks and things like that so the vast majority comes through that because of that it's difficult to measure the exact cost obviously there's a time investment we do some we don't do any advertising per se we do a little bit of remarketing on google adwords uh what about salaries that's usually the biggest cost here yeah so we we have we only have um we only have kind of like one mark one full-time marketing person um and i obviously do a lot of the the blog what's a total team size about 30 people 30. okay you only have one in marketing and sales uh so we have one marketer and then we have one sales person based in our head office in sydney and then we have just added uh three sales people over in our portland office but that's literally brand new as of like a couple months ago yeah so so i mean it sounds like you maybe don't have a good sense of what cac is because you haven't you haven't had to use money to make money there's not a lot of competition which means you're not really competing from an advertising perspective that also has downsides because you've got to create a value prop that people don't know exists it's not like selling a crm where people can see it as a commodity with you know a comparable feature set or comparable cost um but yeah what we we do like when we look at our revenue forecast we think we can continue to grow roughly at the pace we are which is about 150 200 for the next year or two with our current model after that we're pretty confident that we will hit a um a little bit of a ceiling in terms of what inbound can do and it's at that point that we'll need to come up with really solid uh you know kind of like cost per acquisition model involving sales people marketing costs what's capitalization look like today have you bootstrapped or raised capital yeah so we're 100 bootstrapped um so we put in about 50k of kind of like founder loan um and then forced us to get to profitability pretty quickly which in b2b is is a lot easier than that's right so you're profitable today yeah i mean strictly speaking we've been profitable from the end of the first year um obviously you know wafer thin and that we we put it all back in um it's a constant balancing act but um yeah we've deliberately avoided taking any loans or financing or capital or anything like that so far interesting that's great all right let's wrap up here tim with the famous or tom with the famous five number one what's your favorite business book i don't read any even though um people constantly tell me i should but um none number two is there a...