How Gomodus CEO Jeremy Schultz grew to $33.6M revenue and 80K customers in 2018.

hello everyone my guest today is oren broberg and he's a serial entrepreneur passionate about applying technology to helping sales people be more successful and engaged with their customers his current role leading modus at b2b sales enablement technology builds on his professional history and sales leadership learning and recruiting software he describes himself himself as collaborative focused and driven orrin are you ready to take us to the top of course all right so quickly uh distinction is good is modis your baby you're the founder or you are brought in as the ceo i'm a co-founder okay good your co-founder when did the company launch well the company launched officially in july of 2013 although the product or core product app data room started within a media production house a couple years before that interesting okay so i want to quickly understand what the company does and what your revenue model is why don't we start there well we're a b2b uh sales software enablement company we are subscription-based so you could say it's a horizontal app from the pricing standpoint we have professional services that we um add to the product to make it more configurable for our larger enterprise clients so if you've been to our website you know that we work with large global manufacturers and everybody has sort of their unique little twist on how they want to uh executes their sales and enablement strategy yep so just to be clear can we think of this almost like a big storage container for all the powerpoints and all the sales material whether whatever the location is the places whatever whoever the sales rep is and they can essentially quickly search this data room you set up for them for the sales piece of material they need on the spot in the moment yeah that's that's accurate that's sort of a we call it the table stakes for companies like ours in this space um it would be like a level one type of application for our our platform um either the other levels that take make it more interactive we integrate the real power is when we integrate with existing systems so we're really part of a marketing technology stack so we sell to marketing people marketing professionals and so when it by integrating with crm and marketing automation you really get the value of the interaction with our platform and customer engagement um and be able to enact nurturing and campaigns and that kind of thing around uh what happens with our platform so generally speaking without going down every customer cohort i mean what are people paying you on average per month are we talking you know a dollar a thousand a million a hundred thousand what is it in general well per user i mean typically anywhere between 35 and 50 dollars per head per month got it got it that's the basic yeah so it's a per seat model yeah and then we we add on top of that for different value-added services okay now you're in minneapolis have you bootstrapped the company did i do what have you bootstrapped or raised oh we bootstrapped for the first three years and then we had a raise in 2016. oren you went to the dark side what happened i wanted to grow faster man i mean it's all about growth right how much did you raise available models pedal to the metal how much did you raise um i can't tell you exactly but i can tell you it just it was a simple series a with like mid single digits okay why do you why do you not share that oh we're privately held okay but i think i mean though let me see here i think my research team looked this up actually online um okay but sorry i i don't have it right in front of me at the moment but it was you said low single digits and millions no mid single digits mid single digits and millions okay and you said it was about accelerating growth where did you know you could spend that money to accelerate growth well i mean when did i know i mean it was pretty early on it's it's sales it's sales and marketing uh yeah but what does that mean oren are these sales people is there a channel you're gonna plow the money into yeah sales people okay on an inbound so we execute you know inbound uh marketing of course uh with uh content social seo pay-per-click all that generated leads we do that we also have outbound so we have a pretty um i would say a complete and effective sales automation check stack and we've been adding sales people and growing it that way and where so tell me now the team breakdown how many team how many team members are at right now and what percent of those are sales folks we have 24 team members including a rep in copenhagen we have a group of clients over there and uh currently we have eight sales team members okay and is so besides copenhagen is everyone based there in minneapolis everyone's in minneapolis yeah that's great so what i mean first off i love kind of sas companies that are not based in the valley or new york so what are you finding are the advantages you've got being in minneapolis a lot of clear-headed people that are grounded in reality what what do you want me to say no i love the people in california uh yeah we've got a real hard-working good work ethic smart programmers here we have no problems at all our offices for in terms of firing and finding good tech talent uh both back-end and front-end app developers uh we're right next to the university of minnesota our office is right here so we're on the light rail and well we bring them over um you know as interns and uh they get to try us before they they work here and we get to to do that yeah it's a fun place to work and what have you scaled to today so you've launched again launch 2015 two years in what have you scaled to in terms of total customers using you guys we got about 180 uh existing customers okay uh and it's probably pretty evenly split between smb and enterprise yep um yeah we've got uh i got some numbers for you like 9.4 uh content interactions uh 9.4 million content interactions in 2017 uh 18 000 leads captured with our app uh last year internally about 270 000 slack messages and about 80 000 overall registered users of our app worldwide so we're in about 95 countries and our app is in 25 different languages that's great and give me the total seats across those 180 customers are we talking thousands or high hundreds total seats well yeah 80 000 registered users oh okay but i just want to make the distinction though i don't know if you have a freemium plan or not are those 80 000 all seats all part of the 180 logos or businesses using you yes oh got it okay wow so okay so you're selling you're selling then big kind of seat packages yeah we're selling enterprise deals like caterpillar's our largest client yep yep you know we've got lots of folks using it i mean just just doing the math i mean you on average your average deal with 180 logos and 80 000 total seats i mean your average deal you're between 400 and 500 seats a pop yeah yeah i mean that's pretty i mean that's pretty significant that's a good so i mean you're really in the fortune you know 500 really is your target your target folks yep yes sir that's great now if i take that seat price the minimum of 35 times the 80 000. i mean you guys are north of 2.8 million a month right now is that accurate math oh yeah yeah or what you said oh yeah not just yeah are you way north of 2.8 yeah why are you way north do you have other revenue streams yeah professional services yeah we have yeah we have professional services also we have as we have three products we have our core product app data room which i told you about uh and then we've modified it for trade shows okay and it's called lead capture the 18 000 leads last year right yeah and with those kinds of customers imagine like the average value of a lead for somebody like a caterpillar or a big med device company is this like an app they're using at events to scan badges or something yeah just taking a camera on your phone and turning it into a badge scanner and pre-populated a contact form as a part of you know using our app and integrate that with marketing automation you could be nurturing leads while the show's still going on yeah now we're in here here here's a here's the tricky question so you raised five mill or you raised you said mid single digits in the millions to accelerate growth what are you growing out year over year about are you doubling you every year is it a little less we're not doubling i would say rules of 40s yeah and what tell me about break down the rule of 40 for me well we're we're north of 40 growth and we're basically break even even up that's great so over the past 12 months you've grown you've grown above 40 year over year yes sir that's that's wonderful so walk me through some of the other kind of key components of a sas company tell me about your churn and how you manage that our turn is very low uh it's less than ten percent logo churn of course our revenue net you know negative net revenue return how do we manage it is that is that annual or monthly annual okay yeah i mean people like us we've got clients that want to come work for us and have um part of being the midwest i guess right now we have a a customer success team that is very involved with our clients so uh we're we're always there and we're talking to them we our net promoter score is pretty good uh north of 75. um yeah clients like us yep now if you if you you give me your net and i may have i think you may have cut out your gross churn annually on a revenue basis you said it was ten percent our logo churn on an analyze basis is less than ten percent less than ten percent okay now do you do you break that down into revenue churn as well or no you just look at logo churn oh yeah i'm saying we have a negative net revenue churn obviously because we're growing yeah so that's what i was trying to figure out is if i can if we can understand gross revenue churn we then understand the job you're doing at driving expansion revenue to make up the churn plus drive additional growth that's what i was trying to get at oh yeah absolutely so so where are you getting the expansion revenue from is coming from upselling additional products more seats more usage what is it all of that yeah we're adding products we're adding capabilities uh we're expanding within their large enterprise accounts uh you can imagine there's lots of lots of opportunities to expand from a lifetime value perspective what are one of these guys worth to you you think at least at a minimum a lifetime value is north of a hundred and twenty thousand dollars and take me into your brain for a second how do you get to that number the formula you use to collect you know to put together lifetime values is based upon you know churn gross margin and that kind of thing is that what you mean yeah so teach us how you do that you take your you take your your monthly rpoo multiplied by the number of months they stay with you multiplied by your gross margin or the same way everybody does it okay well that's it's not the same way actually a lot some people try and get aggressive and they won't include their gross margin or gross margins yeah you gotta you gotta do that yeah sorry i assume you guys are in the general kind of 85 to 90 range there right yep yep interesting so lifetime value north of 120 grand and then what are you spending to acquire these customers well that's what we're trying well obviously we're trying to you know raise our cac ratio like everybody else and so you know i feel a little uncomfortable giving you all the details on our our cost of client acquisition you know um publicly but uh it's it's it's around industry averages i hate to hunt on that question but that's all you're getting a little confidential stuff yeah that's okay let me ask it differently just to understand how you manage money so what do you how quickly do you like to recover your capital once you put it out what's your payback period on these new accounts or is there a number you like to optimize for 12 months less than 12. okay great and you're hitting that or that's your goal we're hitting that okay good took us a while to get there though why it took us a while to get there of course when you're expanding sales and marketing i'm gonna see your profitability is gonna take a dip for a while and it's gonna take about 12 months to recover yep now if your average deal size is a 400 seats at 35 bucks a pop right that's like 14 grand a month 168 a year so if your payback's less than 12 months you're spending less than 160 grand to acquire these customers that's fair to say right okay and and walk me through i mean are you doing any direct paid stuff or is it really you just let your inside sales team close deals coming to you naturally for through organic channels it's a real blend um we have inside outside sales people so if you're wondering where our leads come from most of our leads come from going to trade shows and making appointments ahead of time and walking the floors we are getting good inbound leads uh but that's not enough to to grow yep and then and then help me understand with less than 10 percent logo churn and your gross margin and everything that's just shared with me 120 grand especially when first year revenue on a 400 c deal could be 160 grand 120 grand in ltv seems really really low am i missing something math-wise there let me see if i can explain this um i can't really explain that right now off the top of my head let's move on to the next one okay is that because is that because it's something you don't want to talk about or it's just because it's too complex to talk about in a simple way actually i haven't thought it through that way to be honest with you because i just think if you're running the equation like you said you were which is just you know your churn times your margin times your acv right i mean your ltv would actually be much higher than 120 you'd be in the i mean you'd be in the five half million dollar plus mark yeah and then yeah you're right okay i just want to make sure because in my mind i'm mixing old data and newer data ah i see you're in and so to answer your question directly is i have not pulled it all together the way you're looking at it uh but we do we know our i can say safely that our lifetime value um is north of 120k i see what you're saying i also say that are um well you know anyway we're the other ratios are good too so we're trending positive we can always get better um and we're trying to increase our average deal size we're also looking at you know executing our strategy a little cleaner and more scalable yep and we're looking at also introducing a new product they're going to have a new kind of buying model they depend upon direct sales interesting now when did you raise that last round of funding how many years ago was that you said 2015. august of 16. so we're passed to your mark from what you've done that so oren right now you're either raising capital or you're selling which one is it well well we're going to raise more capital this year i was going to say you certainly have the room right if you're doing north of 2 8 a month you're north of easily north of 35 annually and uh you can obviously afford to raise capital on that and not get diluted in in a crazy way now will you have to go outside of minneapolis to do that you think or no well you know still press capitals out of new york and they're they're great to work with and was it against sopras sopris okay soper's capital series a very good all right let's wrap up here oren with the famous five number one what's the last business book you read uh sales velocity formula macro bearish sales velocity formula he and he was from salesforce right i mean sorry hubspot guy yeah hubspot number two is there a ceo you love getting dinner or lunch or breakfast with there in minneapolis oh here in minneapolis yeah probably doug baker with which company ecolab ecolab okay number three what's your favorite online tool for growing the business well slack we use just we rely upon slack incredibly number four how many hours of sleep to eat every night between six and a half and seven that's pretty good and what's your situation married single you have kids single single kids how many are you empty nester or no yes oh that's good okay so you get plenty of sleep and how old are you oren i would say i'm north of sixty fifty-five most people would say i'm un most people would say i was eating most most people would say i'm under x age not i'm north of x age and you ask why i care the reason is simple a lot of people think once you're older than 28 you can't start a company so you're more inspiring if you're not you know under under 30. i run into that attitude for millennials all the time and it's like i don't have time for that attitude which attitude yeah it's like okay you're too old to be relevant i know it's a sad thing i mean that's why but you just ask why do i care that's why i care it's possible it's easily doable and frankly you have more wisdom than folks younger than you so you should have more success yeah i try to make new mistakes not repeat old ones that's good or in last question what do you wish your 20 year old self knew i would have told myself to relax and believe in yourself guys there you have it from uh from oran relax believe in yourself he launched the company back in 2015 or sorry 2015 raised capital around the same time as they've scaled again focused on helping you jump in analyze the data especially on the sales side of things they've got multiple different business models we talked mainly today about the pure play sas one which has super healthy economics they're serving over 130 logos over 80 000 seats at 35 bucks of seats they're that just that stream north of 2.8 million a month growing over 40 year-over-year less than 10 logo churn annually with their team of 24 folks out there and minneapolis oren thank you for taking us to the top