How Hubb CEO Allie Magyar grew to $2.2M revenue and 110 customers in 2018.

hello everybody my guest today is ali magyar she is the ceo of a company called a hub and a skilled entrepreneur and technology maven with over 15 years of experience driving successful tech enabled service companies she's been named the 2017 portland business journal 40 under 40 a 2017 top woman entrepreneur by smart meetings magazine and in 2018 was an ey pacific new york uh sorry northwest entrepreneur of the year finalist ali are you ready to take us to the top i am glad to be here today thanks for having me you bet okay so tell us about hub what's the company doing what's the business model how do you make money sure well hub is essentially software for meeting planners so we help with all of the back-end processes in terms of collecting managing and marketing data as it pertains to your sessions your speakers your sponsors and then also help with uh one-to-one connections at meetings and events interesting okay and is it all done be like a mobile app or what yeah no this is all it's a cloud-based software um so we are helping the back-end users so if you think about an event that you're producing you follow that information get external teams to sort of vote and grade it accept it so we're the platform that's cloud-based that allows people the collaboration to be able to get work done more quickly and then be able to market that outwards to their attendees with session listing speaker listings convincing them to be able to register interesting very good and walk me through pricing is it pure play sas sure well in the events industry sas was a word that was sort of unknown uh and so we are in an antiquated industry that is slowly starting to convert so when i started my career in events into that early 2000s uh fax machines was our biggest mode of technology so i've seen our industry change quite a bit but our business model is a variety of typical sas which is just an ar contract that allows people all you can eat you know come in manage as many events as you want on our platform and then we also work with some customers where maybe they only have a single event per year so typical you know same thing as arr but they may only be managing one event versus mini events yeah and maybe they're not on contract they pay per event but they pretty much come back every single year for that one event correct yeah interesting okay um and i don't want to go down kind of every customer cohort i'm sure you work with all kinds of customers but for the people that are paying on the sas kind of model annual model on average what are they paying per year would you say sure our acv is roughly around 20 000 right now okay fair enough and generally speaking how many events will that person run that's paying that much uh on average it's about two to three typically most companies have one really large sort of customer or user conference per year and then they'll do a few other smaller regional events okay interesting and how does that compare to someone that might only want to use you one time for an event well typically if they're using us just one time for an event it's still an event a very large scale so there's still hub is a good fit for anyone that has 50 or more speakers session sponsors so if you have less than that you really can handle the automation yourself um it's not that complex so for us even if it's one event uh the complexity could be we run some events that for a single event are 25 000 people in a venue with thousands of speakers what would they pay for that one that that kind of event yeah um an enterprise contract can be in the six figures oh wow yeah okay okay interesting interesting so i mean as part of that professional services though you're doing a lot of consulting work customization work yeah usually if you're working in the enterprise you'll end up being a part of an integrated technology stack so you've got sort of your sas player your license and then you'll have professional services on top of that in terms of needing to integrate across their tech stack you know meetings to ensure that everything is happening seamlessly for the event interesting i want to learn more about your back story before we do though if you look at your revenue over the past 12 months what percent would you say was professional services versus true sas true recurring sure yeah 25 of our business is in um in professional services and the 75 is in pure sas so pretty healthy ratio there put this on a timeline for us when did you launch yeah well i originally created uh the product back in 2012. um i was in my previous role as ceo of an agency so we planned and managed some of the world's largest technology conferences uh yeah so we do a lot for microsoft um so like microsoft ignite is a big conference that i've been involved with from the very beginning so um you know big big complex user conferences is really my background um and i was sick of using spreadsheets and email for everything and so i decided to build a platform that helped my team be able to scale so we used the product uh from 2012 to 2014 inside of our agency and really built it to help manage the events that we were managing and then i sort of woke up and said wait a second if this is bringing us so much value and i'm seeing this adoption and technology really change and evolve in our industry i wanted to take that to market so i bootstrapped the company i put a significant amount of money of my own cash into it how much about three million dollars okay how did you spin it out or did you keep it inside the agency uh no we did spin it out so in 2015 we did our proof of concept and so we went to market and in the first year we ended with 21 paying customers about 650 000 in revenue and i realized there definitely was market traction and market adoption so at that point we spun out the company into its own company separate from the services okay interesting and there's always a challenge when people do that on how do you structure the cap table on the new entity do you give the agency a chunk of it is it a clean cap table how did you make that decision what's your cap table like sure well fortunately for me i was a single owner of both companies so it was much less complex because i just split the companies and allowed dynamic events uh to pass over all the ip rights and all ownership over to the new entity okay and when you say you put three million of your own money and is that going back to 2012 even dedicating staff from the agency you're looking at all their salaries whatever they put in kind of total to the the company um no nothing to do with salaries in terms of professional services this was a core development hiring our go to market team in 2015 our original marketing budget so it basically was everything to get the software off the ground i guess what i'm asking sorry what i'm asking though is did you take would you basically did you basically use the agency cash flow to fund the new business and that equaled a total of three million um so i did use agency cash to be able to fund that three million dollars but there wasn't any expenses for the agency um that i would have been receiving professional services for as a part of that three million totally no i get that yeah we outsourced our development in the first couple of years before we brought that in-house so it was a pretty expensive thing to get off the ground yeah and how many customers are yet today sure we're about 125 customers today that's great and these are uh sorry actually what i meant to ask there was how many are on the kind of ar plan not the one-time event plan yeah the majority of them are on more of our ar plan versus the one-time event so about 90 of our customers are on pure er okay so call maybe 110. that's great okay and i mean can i multiply that that 110 times that average acv you gave me that put you at about 180 grand per month right now just from that line of business yeah that's correct just on that line of business yep and then it sounds like you've got maybe 10 to 12 customers where you're signing kind of six-figure deals for one massive event that you're managing correct that's great and you said that that typically makes them about 25 of your revenue right the professional services that's great so yeah at 180 grand a month that means you're doing about 2.2 million bucks per year on the sas side at another 25 for the one time stuff a healthy business you got going this is this is kind of cool how many how many folks full time now we're about 40 people full time but we just closed our series b rounds so we're hiring up so we've got about uh 10 more that will be joining our team over the next 60 days oh that's great so you put in three at the beginning how much total have you raised to date about 10 million to date okay so seven million series a uh sorry so no we've done our series a and our series b plus the original investment that i did so total would be 13 million between all of those so adding in your own yeah so we raised about 3.7 million at our series a um so we competed and won first place at the seattle angel conference and the bend venture conference which really kicked us off on our investment path and then did our series a as a part of that so about 3.7 million there and then we raised the remainder at our series b just a couple of months ago that's great congrats um one of the one of the things that i see a lot of event companies like the struggle with their event apps is exactly what you've articulated which your events are sas is hard to make work in an event space because they start and they stop so unless someone consistently does events sas models really don't work it throws your churn all out of whack walk me through how you think about your churn today and what is it especially on the 110 that are paying really on the arr model yeah you know the events industry has a pretty significant churn rate because of the issue that you mentioned in terms of if it's a per event either the event could go away or they restructure how they do the event or how often they do their event so i think there's a unique perspective if you're looking at building sas in our industry of what you need to build so for us we're dealing with all of the speakers and the sessions the sponsors things that happen across every event that they're doing regardless of whether it's a user conference a regional conference maybe even a trade show that they're going to so you have to start thinking a level bigger and you have to start thinking about what does make sense for them in a true ar model and really it becomes a data play so if we're able to look across the entire portfolio of their events and now start to predict for them who their best speakers are on which topics to which audiences we're raising it above just the event marketing level and now we're at the cmo level where we're actually helping them to create better content more relevant content for their audiences and increase business in a significant way that seems to make perfect sense to me so what is your what is your churn today on that sas plot from each year yeah on the sas platform we're about 80 retention so about 20 turn um so that's a mixture of um you know people that maybe we did a cannabis conference last year which was awesome but they aren't in business any longer so you have a variety of different types and verticals that you focus in um that create a sort of a varying amount of churn based on the vertical or the industry so 80 80 uh annual kind of revenue retention again each year and then if you look if you add back expansion revenue on top of that um how much how much what do you get up to in terms of net revenue retention yeah net revenue retention we're about 110 right now okay got it so if you're churning 20 you're grading up to 110 that means you have to make up twenty percent plus another ten percent thirty percent expansion right that's great and good oh well part of that is really being strategic about how you run and manage your product so for us the original product that we went to market with was around content so it was the speakers and the sessions but as we realized that the workflows were very similar for sponsors and exhibitors we added on a new product a new module so you have the ability of upsell and adding on additional modules so we've been very strategic in terms of what we've done from a product development standpoint to allow our clients to come in and be able to increase their acv every year not only because their events are growing but also because they're adopting additional modules for their events that's smart and with that kind of module adoption strategy i'm curious what growths look like so if you're doing 180 grand per month today on the sas platform what were you doing about a year ago oh it was about half of that okay wow so healthy growth 90k a month something like that yeah we've doubled every year in revenue that since we've been in market in 2015. that's great congrats and the team of 40 where's our one based we're based mainly in vancouver washington which is right across the border from portland oregon um so that's where 95 of our people are based we have a remote office in seattle where a couple of people are as well washington state very good competing with with amazon jobs huh oh yeah amazon and in portland the startup scene has really changed with jama software drive software there's a lot of good tech in portland as well so that's an interesting challenge in and of itself is just growing and scaling a startup when you're competing nike adidas hiring a lot of dev tech up in portland as well uh very good and then um talk to me about what you're so you got i think you said you had 110 customers on the sas platform what are you paying to acquire one of these customers who ends up again paying you i think you said acv average was about a 20 grand a year yeah uh our customer acquisition costs are they vary between five and six grand this year based on the different campaigns that we're doing but we have a pretty low um cap yeah that's pretty good so five grand on a twenty thousand dollar acv you're getting paid back in what four or five months that's healthy that's great and where are you spending that money typically you know our marketing team has really worked miracles on a really small budget so ringy merriman's our marketing director and she has turned hub into a content generation machine so we have your normal mixture of inbound and outbound marketing activities but one of our greatest converting activities is our content generation that we're doing ebooks white papers um speaking that is able to convert into qualified leads because they're interested in what we're doing and how we're being visionary for our industry ali on that note let's wrap up with the famous five number one what's your favorite business book ooh traction would be my favorite business book number two is there a ceo you're following or studying in your hometown um steve marsh from portland who um grew and ran smarsh was probably a big inspiration my biggest inspiration in the local area number three what billing tool do you use for hub i'm not sure that's going to be a great answer because right now it's all in quickbooks so if you have a product and you want to market to me go for it quickbooks all right number four how many hours i sleep to get every night uh i get a minimum of eight hours of sleep because i do not function well if i don't get sleep and what's your situation married single kiddos yeah married with two kiddos that keep me on my toes every single day oh that's great alley do you mind me asking how old you are sure yeah i just turned 38 this year oh congrats great and last question what do you wish your 20 year old self knew that it will all be okay there was a lot of experiences and failures early on in my entrepreneurial career where i thought life was over and really all it did was prepare me to continue to grow and expand it will all be okay event management platform ceo ally with hub founded in 2012 now today doing about 180 grand per month in revenue that's up double year over year so about 90k per month back in november 2017. they have 110 customers paying about a 20 000 acv average on their arr platform they also have to do about work about 10 you know mega conferences every year that maybe pay six figures one time where she helps manage those platforms so additional revenue there lower margin but additional revenue doing all this with about 13 million bucks raised including 3 million bucks of our own money eighty percent annual retention uh each year gross thirty percent expansion so 110 net revenue retention each year pretty good five thousand dollar calc on twenty thousand dollar acv is about a five month payback economics makes sense team of 40 in washington state and other remote locations again building up their really event and content platform hub ali thanks for taking us to the top yeah thanks so much nathan appreciate the time