How Groove CEO Chris Rothstein grew Groove to $5.2M revenue and 75K customers in 2018.

hello everyone my guest today is chris rothstein he is the ceo and co-founder of groov a sales and engagement platform before group he built skilled and managed enterprise sales teams at google chris are you ready to take us to the top yes i am all right you threw your hat in a very hot war so tell us what groov does and what's your revenue model how do you make money yeah so we are a sales engagement platform as you said really what we do is we help sales teams be more effective understand what's going on and repeat their process and and make it more consistent across their sales team we make money in a very traditional sas model just pure sas pure sas and without going down kind of every cohort what would you say the average company uh pays per month the average is probably around 13 000. okay 13 000 per month and so this means it sounds like selling maybe multiple seats to a team how many seats you usually per team yeah we we really focus on 30 and above but we scale up to our largest customer has about 7 000 seats and then we have our 8 000 now we have a bunch above a thousand okay so about 13 000 per month on average's payment i mean that would actually i would say put you kind of more into kind of mid-market enterprise level versus some of these more starter programs yep yeah very cool um let's kind of put this on a timeline when did you launch the company what year yeah so i left google technically in 2012 but we really focused on this in 2014 um and then we really i would say started monetizing more in 2015. okay and who's we uh my co-founder and i were at google and then our first hire was also from google uh oh i bet google i bet google loved you for that yeah yeah yeah they do they're they're a customer as well so well that's good um describe the makeup of the founding team so what's your role what's his or her role yep yeah so we've had uh we had three co-founders all of us can code and all of us have sold so we're kind of a weird uh mix good mix chris i would say that's not weird that's very good yeah yeah so we we love selling we've done kind of sales engineering roles i've built sales teams but i also like the code in my free time um and then my co-founders are the same way so very cool we're all a little bit of both self-taught coding uh yeah two of us are self-taught one has a master's in cs how did you teach yourself i just literally i i i i always worked on it but then when i quit in 2012 i just coded every every day for almost a year and a half that's amazing did you use like code academy or tree house or any of these tools just online just read online and build stuff that's great you're you're a problem solver all right 2014 and then scale it up to today so how many companies on the platform today uh today we're a little over 400. okay that's pretty good those are all paid no free accounts yep no free and boots dropped or we raised we were bootstrapped for you know until we raised the small round in 2015 and then we we've uh just a note and then we've raised the official one price round so 3.8 million in in funding total yep that's great okay so 3.8 million now if i take 400 you know customers times that monthly average of 13 grand i mean that puts you like 5.2 million a month is that accurate yep we're in that bubble okay very cool so you the reason i kind of asked that was skepticism is because your account would actually put you in a very rare category in terms of you take your arr and divide that you know by your funding you know most people have less ar than what they've raised total you're very much the opposite yes we're very very conservative originally my co-founder and i wanted to bootstrap always and we were planning on we we saved up money we went down that road for a while we built up and with that eight our first 800k we became profitable we had over a million revenue with that um but then we're like we can grow faster and we should grow faster so that's why we raised that money but we're still i would say slightly abnormal at least for the value you're you're definitely abnormal i've i've done about 3 000 interviews and i can say with emphasis you are definitely not not the norm so what about growth rate a year ago what were you at run rate wise uh a year ago about 2 million okay so you more than doubled your every year yeah we've more than double every year that's great and where has most that growth come from is it expansion revenue across the same accounts or brand new customers that's a great question it's almost exactly split it changes month because we still get large deals here and there um but almost always it's 50 50. almost exactly yeah and what do you anticipate so right now if you're doing five million a month what is that 60 million a year i mean oh no sorry five five million eight ar oh that's a okay good i was wondering i was going to say this is like this makes you like a very much not silicon valley company your arp who you give me that was not monthly that was an acv there yeah yes yes got it that's where the that's where the misnomer was i was like okay no no no that would be that would be uh very very nice yeah so just to be clear you're doing about 450 grand a month today that's up for about 200 grand a month a year ago that's great okay still but by the way still healthy so you still doing more revenue than you are what you raised yes exactly talk to me what now when you look at kind of expansion revenue usually companies at your stage they have very clear pricing axes that allow them to drive expansion and usually it's like a seat model a feature model and a kind of data usage model what are your axes yep yeah we have uh kind of two we we grow seats obviously but then uh we have a modular element so you buy into our platform platform fee and then after that you can add on different elements a dialer an unlimited sku uh sms and all these different things so you add on these and that that's kind of how we upsell we honestly haven't even focused on upsell most of it's been natural interesting okay so that that flat though initial feed that is like a base recurring fee and then you can add on top is that accurate yep and all the add-ons are also uh reoccurring fees as well it's just you can enable other parts of the platform and and basically so if i have 100 seats and i'm paying you for the base thing and each one is 20 bucks a seat if i add on the cost scout shirts like adds five dollars per seat across the whole account exactly it's a beautiful thing if it happened can you just no touch a lot of it a lot of and that is right now we should be doing more but we aren't because we're still a little resource strategy yeah no i totally get that now this should all be reflected in in a really incredible net annual kind of retention revenue retention rate what i assume you're well above 100 how far above yeah i think uh on a monthly basis we're like uh our net churn is like negative two and a half three percent per month when you look at the revenue retention annually how far above 100 are you do you know oh uh i haven't looked at that recently but yeah it's every year it's very very solid growth i can't i don't remember off the top of my head that's okay do you know what a year like of a year one account is 13 grand typically what that usually morphs to in year two i think on average i i think in a lot of the cohorts it's double uh okay doubling so i i would have to look it is a little chunky because we we tend to go after super high growth companies so we have a lot of the fastest growing companies in the world and these just naturally are growing incredibly fast um so it does depend but a lot of the cohorts are growing yes they're all growing at a very nice rate i would have to look at the exact number let's go back to the initial sale fully weighted cac on a 13 dollar acv account is what how aggressive are you comfortable being yeah it's it's interesting getting the average is hard because we do have these massive deals and so on when i calculate it's about 7.9 k so around 8k let's say um but you know it is it it does depend most of our sales is is not through marketing costs it's actually the cost of doing sales the cost inside sales team etc exactly so around 8k yeah so around 8k to get a 13 000 account that's like a nine month payback period does that pay that period hold no matter if the the first year acv is a million or a dollar it's usually always a nine month payback typically pretty much yeah if anything our large deals just pay back faster yeah yeah that's interesting um talk to me since you come from kind of being inside sales organizations writing sales code you have 360 degree how have you structured your inside sales team yeah we have um basically a one-to-one pair of sdr and ae so like a pod structure it's now called um and and they we give them a target list and they just work on capturing those accounts where we know we can provide value we do a traditional cop model pretty much and everything else is fairly traditional a lot...