Highspot Revenue, Valuation & Funding (2024)

hello everyone my guest today is robert uh robert wobby he's the co-founder of hispot co-founded in 2012 after discovering the need to empower sales and marketing teams with sales enablement as the ceo he's passionate about leading the company and developing the industry's most advanced technology solutions that help customers win more business before this company he served as corporate vp of the server and tools division at microsoft robert you ready to take us to the top i'm ready to take you so you are you a sight united fan is it again are you a nadella fan you like what he's done at microsoft i think he's done really amazing work i mean he fundamentally has both changed the culture and made a lot of the technology more relevant so he's doing kind of amazing things and i guess the company if you talk to folks they love it and you look at the stock price it's you know richest cup most valuable company in the world so are you still on that train or you get totally off in 2012. i got totally off and 20. oh bummer or maybe it was good at the time who knows all right all right tell us about high spot what's the company doing are you guys pure play sass uh we're a pure play sass um what we try to do is help um customer facing teams engage with customers engage with prospective customers more effectively which means we help them with what to know what to say and what to show so they're having the right conversation and it's really any customer facing team so it could be sales it could be services it could be account management um and if you're having that better conversation that more relevant conversation the hope is that you can if your sales you're increasing revenue if your services you're increasing customer satisfaction if you're account management you're increasing your renewal rates but fundamentally you're giving that customer a better experience we're not about automation we're about helping people talk to people it's all about empowering them it turns out about half the company tends to be these customer facing roles and our job is to make them better more effective at their jobs and hopefully have the customers have a better experience and when people are hearing about your technology going man i want this thing and they start paying are we talking like a couple grand a month or more like you know 100 bucks a month more like freemium kind of model so we're not a freemium model because one of our value props is we help a sales team whether it's a 20 person sales team or a 20 000 person sales team we're the single pane of glass so they know where to get their content where they get their guidance where to get their trainings or we make we take all the chaos out and make it really easy and it works kind of where they work so we tend to be a implementation where it's either a division or a whole company or maybe a whole geography we're not onesies and twosies because we're trying to help the whole team work more effectively yeah i want to capture more your backstory but if i forced you here into an average just for the sake of simplicity and time what's kind of average first your acv look like would you say well we so one thing that makes this a little bit unusual which i actually really love is that we serve smb so we'll literally 20 25 30 people sales team love those customers we have lots of those all the way up to siemens and amazon and aetna and very large companies that have very very broad tens of thousands of users yeah by the way i totally understand there's a lot a lot of sas companies are like that yeah but actually in our space at least we have some competitors that mostly focus on smb and mid-market because they have they've sacrificed a lot of flexibility for simplicity and then we have a bunch of folks in the enterprise who've done the opposite and we've tried to do is really have a pretty easy to use platform that actually has flexibility under the covers well i want to talk more about that it goes all the way from it's actually what's also interesting as you think about you know your audience is it's actually tricky to have both motions in the same company an smb motion and an enterprise motion are pretty different from everything from you know the product itself of course but then also demand gen services renewal all that is very different if you're talking about a 30k asv to a 1 million acv yeah so i want to get more into that and your backstory over the past 10 years right but but again if you look at a sweet spot acv year one i i understand you have a huge range we don't have time to talk about every cohort what would you say a fair averages um 100k is probably a fair average across all the different cohorts okay and paint that picture a little more for me so someone's gonna pay a hundred grand a year what's that team size probably look like well our list price is about fifty dollars per user per month so we can do that math um and what you're doing probably is you're let's just do a typical initial implementation um we probably are now serving all of your sales maybe your services team we're also definitely have a lot of marketing in there because marketing tends to be where you're publishing that content from and we have sales operations and sales enablement also helping to make sure that the sales team is getting the right information in fact one things that we think about a lot is how do you make sure that if you think about a company you can think you can step all the way back and say look there's three kind of big engines in most companies for the go to market side there's services there are sales and um there's marketing if you think about enablement it's the gear in the middle trying to help those those different things actually align and amplify what they're trying to do make sure they have the common content common guidance common sales plays marketing plays all of that we can measure this though right in terms of stickiness and elena was great before the interview she sent over some retention metrics and adoption metrics right from g2 crowd so if you look at your your your cohorts right whether it's the smb or the enterprise and you look at kind of net revenue retention on any of those courts i hope they're all above 100 of your scale but how far above 100 are you pushing them we're well above 130 percent oh wow that's i mean i would put by the way congratulations i mean i'd say that's world i'd say 140 is world class so if you're at 130 across most courts it's pretty darn good and um i think one things we're really proud of so we we work hard to partner with all of our our companies that we work with so whether you're smb whether you're enterprise we have all the right services and account management to really kind of work closely with you one thing that's amazing is that we essentially have never turned um a a customer to a competitor ever oh come on rob how on earth can you actually track that know that for sure no because we we work with them and so we basically don't churn very much if you turn it's probably because either you're not going to use any solution because you're so small and decided you don't need it or you no longer exist yeah you got bot m a and we have customers that have merged like for example send grid you know twilio bot send grid tulia was a customer saying group is a customer now they're a single customer in some sense we turned we didn't really churn now they're you know all one one yeah so so peel back real quick that net revenue retention onion uh real quick so if you got 130 total that's made up of two components gross churn plus adding back expansion right what is the gross turn number on on the on the way to think about it is we have no gross churn it's it rounds to 100 for real okay on any of your co-works there's no one downgrading accounts or canceling completely there's truly no gross revenue churn it's it's so high you can round into 100 it's between 99 and 100 and it rounds up okay fair enough and then so you've got expansion you then i was going to say then you have motions internally at the company where you have just dominated 30 expansion on average across these cohorts year one to your two acvs etc well there's two things going on in some cases we start with a division or a segment like the enterprise folks versus the smb folks in the company or maybe a geo like we win the us but we don't win europe et cetera so that's one area of expansion the other thing is we're really fortunate to work with some of the fastest growing companies out there so if you look at like companies that have gone public recently most of those companies are on high spot can you name one or two of them sure slack airbnb um dropbox servicenow right and so it turns out those companies are growing at amazing rates and so we just need to hang on if you will all right so ups expansion revenue your big levers your upselling seats and additional teams do you have strong feature based upselling and is there any utility based value metric up selling yeah so one of the things that um we've done is we've kept it really simple we have essentially one sku and so we're not doing add-ons we're not coming back in you and trying to continually upsell we're just trying to give you the core product and then make sure you have great value and then you're gonna you're gonna be a retained customer which we love and then you're gonna probably grow either because of new geos new expansions et cetera or new personas we've been talking about new divisions new geographies there's also new personas so for example sales is using it but now support wants to use it or services wants to use it that's another vector of expansion okay but you know utility based like literally number number of contacts in your account number of something nothing like that and in fact you know we store all your content all your guidance we integrate with all your training and learning platforms so it's all sitting in there and there's no utility-based pricing on that we have you know millions of videos in there we stream those videos all that's included in the price it's really about trying to keep it simple for that customer so they can predict their predict the cost and we just now can talk about the product and not talk about all these different options look there's a lot of there's a lot of upside to simplicity nothing wrong with that i love that you're doing that what's the team look like today how many folks um we will end this for about 400. how many now though uh about 300 300 and what's the breakdown like how do you set up the of the 300 how many of our sales marketing something related to customer success um we're a pretty common configuration so you know we have 30 40 kind of on the product engineering side and then we have about 50 is g a obviously as a go to market about ten percent probably g a ish but a fairly stan we benchmark against various companies in our cohort um over their lifetimes um you know sales forces service now to work days et cetera and we are a fairly typical configuration nothing special about our percentage you're not doing any anything unique with sdr to 80 to csm ratios in your smb or mid market or enterprise cohort you're pretty much following the standard playbook no we don't we have fairly standard ratios at a high level we don't follow the standard playbook actually okay what's the biggest difference between you and everyone else is what yeah so one of the things that we do is we we so if you think about the go-to-market teams this is a very high level we think about those teams differently we think about actually a number of top-level teams we think about marketing everyone does we think about sales everyone does we think about account development as a peer that's unique or relatively unique and we think about what we call growth as a peer what do you mean as a peer you mean like a b channel think about services in other words conceptually robert robert sorry what do you mean by we don't know what you mean by peer you mean like a beach head a focal point no i mean think about the top level teams yeah marketing account development sales services and growth are all top level teams that report to me okay so when you say peer you mean you think of them like equal teams yes same level peers they all have equal charters i see i see and that's really important to us because so account development is a really in our mind a very unique function if you look at how you know startups work typically account development starts either in sales or marketing and then for the next 10 years it bounces back and forth between them because it's a little bit marketing at the top end of what they do and it's a little bit like sales at the bottom end of what they do in terms of talking to customers and then eventually the career path is often sales popping back and forth it's neither one we have account development as a fully um a full charter equal to sales equal account development services is part of that go to market they're part of how we think about i'm engaging with the customer and then finally we think about operations and enablement across the entire go to market it's not sales ops and marketing robert this can be expensive right to get new customers on board like your fully weighted cac how aggressive are you being with that will you spend the full 100 grand to get a new hundred grand at acv our cac is fantastic so again what if to get a hundred thousand dollar your account will you spend that full 100 grand up front um yes okay so are you pushing it higher will you go up to 24 months of ltd yeah so our cac is is is you know we i'm not going to reveal the cat but our cac is excellent it's it's world class right now for our stage and when you look at the model as it as we right now we're growing so fast obviously that cost cat if you look at this model hold on robert sorry i try and stay away from like enough like just big words when you say growing so fast what do you mean by that so we're more than doubling every year we were 150 people at the end of last year will be 400 people at the end of this year has one way to think about that that's expense growth though i hope revenue growth is also reflective of that yes exactly okay that's what's way more fun right i'd rather have one employee and a 100 million revenue than you know 100 million employees in one dollar absolutely okay so cac is world class again i'd say world class to your stage is anywhere between 16 and 18 months um it sounds like you're right in that sweet spot um most of it though sounds like your cac distribution is tied to this head count these kind of four peers you just went through are you doing any a lot of direct paid spend um in terms of demand generation yeah facebook ad google ads sponsor conferences we we use all the channels but um we don't right now we spend probably the most of our money for our particular audience on events we actually have we run the largest um conference in our space um and we do that in the u.s both east coast and west what's it called well it's called the sales enablement soiree and how many people show up 5 000 registrations this year okay and how do you know how do you know that's a lot like what space are you saying that's the largest and just sales tools in general sales enablement enablement there's no conference even closed okay who's closest behind you oh there's no con i mean probably uh sales and ambulance cited as a conference and it's probably six seven hundred people interesting okay um do you put people like uh by the way soiree is interesting too as a as a approach to the market so this category is kind of the oldest new category on the planet it's been around for 20 or 30 years but it's been reinvented by us and our competitors and so from there's two things we're trying to do one of course we're trying to be a great product and a great partner inside the category we're also trying to grow the category so in the sales enabled soiree we actually have both our partners and our competitors in the soiree so we allow our main competitors to have boosts and to be in that center for those people uh our big competitors are seismic and show pad seismic and show pad okay you launched the company in 2012 um you've raised a bunch of capital how much capital have you raised to date uh i'm about 120 plus and the most recent one was when 60 million a little bit ago okay junish time frame when you're raising at your level and you're putting together all your pro formas and your planning are you typically trying to raise for 16 months burned 24 months burn what timeline are you giving yourself um we wanted to actually in every time we've raised we have a plan which allows us not to raise again um and what raising lets us do is be a little bit more aggressive on those plans so right now again with our last raise we didn't we hadn't spent any money from the previous race okay which so just to be clear that means you still have 35 million bucks in the bank account plus more now plus another 60. yeah one now plus 60. which obviously a good position to be in yeah why take the dilution if you don't need the cash because for a couple reasons one is um when you think about a company like ours you know you need to be conservative with that cash to make sure that you have the right burn and then if you need to you can become profitable that that's that's a necessary thing and so if you have more cash you can start to make decisions that are a little bit more aggressive still pragmatic but aggressive so for example we can open up multiple um geographies simultaneously instead of doing them in a in a serial way congratulations on the emea launch in february it sounds like that went well yeah so we have the uk france germany we're able to open up all those offices including asia pacific and do those without having to have an office established have it generate revenue and therefore fund itself and then open the next office with a little bit more capital we're able to be pragmatically more tenacious and a little more aggressive i like that well said um how aggressive will you be so with your current kind of capital structure your growth plans how you see the market i mean are you comfortable going up to five 10 million bucks a month and net burn or no you won't you don't push that hard we don't need to turns out um as i said you know we're growing the head count is commensurate with our revenue we're doing our revenue very well so we don't have to burn something crazy like that well just be clear i don't think i don't think it's ever a question of need to or not i think it's a question of do you see the pragmatic growth and if you convince yourself that you'd spend more money to drive the growth i think that you know it's always a balance growth is great but you also have to do that with excellence so you have to scale the team you have to scale the culture you know we think about our people engine we think about our customer engine we think about our product engine all those things have a natural set of physics that you can't go beyond or you're gonna you're gonna have a problem and so we're trying to scale as quickly as we can but with excellence yep no that makes good sense i think again i said so launch in 2012 you get your first customers in the door um what are you serving today how many customers are you serving hundreds of customers okay hundreds i mean is this kind of are you on a model right now that you feel like you can get that into the thousands or are you more focused on growing wallet share across a couple hundred enterprise customers no we'll have we'll we're we're growing customer count we're doubling we're doubling every metric including customers so we'll we'll get into the thousands quickly oh i'm just going to say i mean eventually you have all the fortune 1000 right and it becomes a question of do you build smb like more smb invest in more s p tools or do you just triple quadruple wallet share and expansion never becomes a more important part of the story it sounds like you're saying no you're happy to go downstream more sell to a higher volume of mid-market smb i'm saying and not ore so in other words i absolutely want to increase that wallet in the fortune 1000 as you said but i think it's also important to continue to expand the base of the pyramid and there's a there's a number of reasons for that um so the first is it keeps the product honest you know if you just serve the fortune 1000 it's so easy to build an overly complex product you see that a lot of enterprise software by having to serve smb in that same exact product all the way up to enterprise it keeps the product team honest that's one really key point the second key point is that our category of enablement is really on fire it is more than doubling our tripling broadly across the world so it turns out one of the things that one of the challenges that we have is for our smb and commercial customers very often we find that they have now moved to a bigger job there's so many jobs open around enablement so it's great for us to have smb commercial enterprise strategic because our customers are moving up and they're bringing us into those accounts so it's a very good way to be viral it's a great engine move around yeah it's great engine there's a third reason and this is this is also important so i've talked about the three engines the product engine the customer engine the people engine one of these we really care a lot about is inspiring and developing our people and if you think about sales what i want to be able to do is take someone out of school have them trained as an account development rep so you know bdr sdr type role and as they mature they can become an ae and then go all the way up the chain i can't have that transition if i'm going from adr to enterprise ae so the fact that i have these lower accounts helps me build a people engine that goes all the way from school our best enterprise reps literally started out at school here as adrs what do you what do you set up when you're bringing people on your sales team and i i just we're out of time so hit me with quick answers here if you can do you set your sales person profitability like 5x in terms of their quota relative to their earnings at ote or is it more like seven eight nine 10x it's more like it's a little bit higher it's higher than five it's higher than okay but between five and ten most people say like six or seven you're in that range isn't that range okay fair enough and then um again launch 2012 scaling the business you're happy to go into thousands of customers i mean do you think that happens this year you break a thousand or maybe that's more like next year when you really start to scale next year okay and then look you know very big customers too that we launched yeah yeah after you get to the scale you're at again in terms of what you raised right a six million dollar round 16 to 18 months from now i mean what are you thinking are you thinking hundred million dollar mark first are you thinking potentially ipo you thinking just get to break even oh i think this so it turns out if you think about what we're trying to do which is enable all the customer facing teams across essentially most industries across most geos this is a massive market and our goal is to be um a significant player in that market it's not about profitability it's not actually about ipo it's about trying to serve as many of those customers as possible our mission is to transform the way millions of people work we'd love to have all those people's customers do you feel like you can break 70 million in an ar by the end of this year or is that a stretch goal it's a little uncomfortable stretch yeah okay next year sure oh go past there you go he says with confidence on that note robert let's wrap up with the famous five number one what's your favorite business book um right now i know my favorite business book right now i'm reading culture code which i like number two is there a ceo you're following or studying um a ceo that i'm following or studying i've been actually following slack ceo zoom ceo um satya is always interesting to follow and talk to all those are very good number three is there a favorite online tool you have for building your company besides your own oh my gosh we are a pure sass player and boy we use almost all the sas tools we live in tools like slack we live in tools like crm so salesforce for us we live in so many of those tools number four how many hours i sleep get every night i'm an old guy i get eight hours how old are you robert i'm 55. that's not old man you got you got another 50 60 years all right and what's your situation married single kids uh mary two kids two dogs cat the whole thing all right last last question what do you wish your 20 year old self knew um actually my my my 20 year old self i would say which i did follow your passion but even do it more tenaciously in other words if you have a passion to go do something don't wait three years to do the safe time to make that transition just do it now so follow your passions yes and follow your passions on a fast timeline there's you never look back highspot.com sales enablement serving hundreds of customers today average acv's in the hundred thousand dollar range hoping to break that 70 million dollar mark here in the next call at four to six quarters as they look to continue to scale 120 million raised team of 300 right now hoping to grow to 400 by the end here of 2019 130 percent net revenue retention that's on the zero percent gross churn pretty impressive actually cac and the ball park you'd expect 16 to 18 months again as they look to continue to scale robert thanks for taking us to the top thank you