Inflectra Revenue (2024)

and flexure was launched in 2007 they sered customers like large defense Contractors Supply Chain companies mix of on-prem and Cloud Solutions they'll do a million dollars per month in Revenue up from 830,000 a month just a year ago so nice growth serving 5,500 customers many customers pay have several hundred thousand per year which is great nice expansion there and he's done this all bootstrapped was incredible by Adam he owns 100% of the business company will profit C 5% this year as he looks to continue to scale uh we'll see what happens next hey folks my guest today is Adam Sandman who founded INF flra in 2006 he's been a programmer since the age of 10 today he serves as the company's CEO he's responsible for product strategy Technology Innovation and Business Development he lives in Washington DC with his family Adam you ready to take us to the top yep I'm ready all right so inflectra helps customers deliver quality software what does that mean oh an engineer would say quality is Fitness for purpose but for us what it means is keeping the world running I mean that's what uh our team does every day day that's what our passion is we work with uh companies that are in the biospace utilities energy companies literally every sector of the economy that you rely on to get to work every day to have power in your house to clean water we work with those kind of companies to make sure all of the it systems they have uh work as they should uh and and going forward in the future anticipate risks that might come so that uh you know as as the world evolves and changes they're ready to address those risks so that's what we're for that's what we're here for and we spoke back in May of 2022 told me your biggest customers are large defense contractors and supply chain companies a mix of on Prem and cloud is that still the case y that is definitely still the case uh a lot of Bio companies I think have added into the mix uh but definitely a lot of Aerospace when I say a defense a lot of Aerospace uh companies but also martime and but large platform companies are making uh big Hardware as well as uh companies working in the supply chain manufacturing space uh Automotive Aerospace but also General manufacturing um as well iot and those sort of sectors mhm M mhm um let's sort of fast forward the past 12 to 18 months want to talk about sort of how you thought about product obviously we're in a very different economic clet today than we were in May of 2022 curious how you've changed or pivoted I guess but first um have you decided to sort of expand with the current customers you had back a year and a half ago you had about 5,000 you told me or have you focused on expanding into new accounts uh that's a great question and we've done a bit of both but a lot of it has been expanding into adjacent buying points in the same customer as well as referrals and Partnerships so finding working with Partners at braders deals and finding more deals with them uh and then obviously looking at larger customers and finding adjacent buying points or following referrals where you know oftentimes people are Consultants they move from organization to organization and they bring us in into those organizations uh and that's been a large part of the you know direct set of sales as well as partnership sales and then of course we're still looking for new buying points that fit our ideal Target client one thing I think we've done a better job of in the last 18 months has been defining our ideal client we we spent a lot of work this year on messaging and message development and uh our website is still in the midst of that transition if you go to it so it's you'll see it's in evolving state but really trying to hone down what is our our ideal customer what is our USP at a much more at a much more deep level not just the technology that sells you know quality software but what is our client trying to do which clients do we find resonate the most and then putting our resources into those clients rather than chasing everyone Under the Sun so I think when it comes to the new sales really Hing down obviously we'll be opportunistic if someone comes to us but not spending resources and not prospecting and not you know focusing outside of that core as much as we might have done you know 18 months ago so I'm curious how much you've grown over the past 18 months and then I want to drive deeper into how you decided what ICP to go after because you had a huge bucket of customers to choose from right so what has growth looked like the past 12 to 18 months uh it's been about a year period of a period about 25% so we would hope to be actually higher about I think 30 35% I may have said so it's been a little bit lower than we' we'd hoped uh but what we and the reason for that number one reason has been just to be clear Adam sorry just to give everyone a number so you said I think you were about $10 million run rate last time we spoke that would put you at about 1213 today is that right that's right that's right that's right um so we were hoping for a little bit higher but I think what we found is that the sales Cycles this last this year particularly a little bit less than last year have extended typically our sales cycle is 60 to 90 days a lot of deals are taking 30 to 60 days longer than that and mostly it's not in the the uh the buyers it's the procurement it's the legal and the compliance uh a lot of those stages are taking just incredibly amounts of time um client says yes we want to buy the tool we we've you know the the CTO the CIO the VP of engineering whoever the stakeholders has said yes all the bureaucracy now takes another 60 days longer than it did a year ago a lot of its budget a lot of it's also compliance security cyber uh gdpr and privacy um a lot of things just seem to be taking longer and it's hard to move those Wheels your bureaucracy also as our you know we're dealing with these large regulated Industries where it's much harder to ex pressure on them because they have a a Cadence for buying software and validating it and doing all the the compliance stuff that you can't really accelerate so what does that mean for today still serving about 5,000 customers or slightly more U more yeah more than that I think it's about 10% more than that because obviously we've added a lot of existing you know deals and cross selling into our other customers oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2,000 87 interviews I've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret valuation is there's many different ways to value a SAS business so the reason you're going to see three or four different valuations inside of your founder paath dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when I hover over here right so the teal is what a VC would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on YouTube all these datas are built from Real Time valuation data points Founders share with us on the show so traction 1.2 million seed round 3.7 raise they sold 22% of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of SAS valuation than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to go back to the YouTube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founder path.com slprs SLV valuation or if you go to founder path.com and hover over products click on get your valuation here and go ahead and sign up to give it a world again all that valuation data live right inside the platform I hope to see you there all right let's jump back into the interview yep so C be 5,500 today now again there's a lot of people right now listening sitting on a customer base of a th000 2,000 but they want less customers that pay more what process did you go through to figure out what customers you want to serve a lot of people would say I just download from stripe I sort from which customers that pay me the most to the least and then I go find more that pay me the most uh so we what we've done we did we've done a two Factor two factors one is we have some all the clients that were on older pricing we've been ratcheting up and that by natural attrition will will do that the second thing is we found that we wanted clients that would have a longer LTV with us customers that are going to be with us for 5 to 10 years because of the onboarding time takes time the training it's a wealthy complex suite and that we find that customers after the first year will stay with us for five to six years but if the first one or two years are rocky they'll leave so we want to find customers that really align with the with the com with the product and not just the product they might buy but the product Suites they can upgrade and what we found is if we look at the sectors and the types of customer it's customers that have a degree of compliance needs but yet also need to be agile so we we looked at the world in two lenses which is the agile devops fast-paced technology companies we look at these industries that are very traditional with lots of compliant needs and we find the cases where the clients are trying to make a move for a digitized future but they have these regulations these are most qualified clients so think of a life science company that's got a a relatively new medical device that they wanted to deliver in a very agile way and take the market by storm but they've got to get FDA approval in three years five years whatever it is so they they have to have a well- defined Software System like ours they can't just wing it together using spreadsheets or you know other tools uh so that's a great example of a client that we we would now proactively Target and then similarly clients in the um manufacturing space that again they want to digitize their future they want to be able to deliver software defined Vehicles software defined manufacturing so they want to be agile and differentiate but they also need to follow all the process they already have whereas a client that's never going to change we don't want them as much or a client that's just you know a IT company that's just going to release software change tools every year um they they're not going to be a long-term customer with us or they're certainly not going to expand and grow and be the reference that we would need we want clients to only want to be our customer but evangelize to other customers for us and so when you look at your concentration at the top of your book today like obviously I don't name who they are the logos but your top customer say do you have anyone paying $500,000 per year what's the top C what's the top group of customers paying yeah so the largest defense type companies are probably paying I'd have to get the numbers but somewhere in the I guess if you look across all their buying points a couple hundred thousand a year that would be and they're mostly the large defense companies or aerospace companies um and then from there you're going to go down into the large biotech large it companies manufacturing that are paying 50,000 60 70,000 a year and there's a is there is a large tale of the people paying 12 to 15,000 15,000 a year um which obviously forms the base of the pyramid so you're not a sales guy but if you want to go Target the folks paying 10 12,000 per year and get them up to 50 $60,000 per year what does that look like are you putting another product in front of them are you asking them to buy more seats in the same in the same business unit or how does that look uh it's both it's first of all identifying additional uh personas in this use in their organization that would use additional features and that's why we actually have three flavors of our product so so we don't just even though it's really one product we sell it in three distinct flavors which Target different personas what are the three one two three oh sorry spy test Spyro team and Spyro plan one product one's for QA audience one is for a like an agile engineering team one is going to be for a pmo program management risk management team you sell to the QA team first you can then expand it to the dev team to the the wi the team that's using the tool and then you can go up the ladder to the pmo that's managing team of teams and that way you're expending from 15,000 a year to you know 75,000 a year then we have a second product which is an automation Suite more specialized we don't go into that to try and sell to customers stand loan because the cost of sales is much higher the the pcc's all of the things you have to do to sell is much more complicated but we when you've got a qualified client on our primary platform we can cross sell that uh very effectively how that ad do you have a sales rep that is dedicated to the customer that is responsible for upselling product two and product three or is there an add a different sales team per product line uh we we we used to do it per product change it to per industry so when you plan it for us uh because of the discontinuity so what happened is you bought product one I get to know you know your problems hand you off to product person to hand you off to customer success so we've gone to an account management model by industry and by region so if you're in North America and in AA space you'll get one person if you're in North American Healthcare you got someone else if you're in Europe you get someone else across all of so then your sales team has to be well educated in all three product lines they can't be a specialist in one that's right now obviously we do have pre- Engineers who can you know augment knowledge but yes they have to know all the products and they have to know at least two or three Industries we're not big enough to have one person for industry as we get bigger you would expect to be of an industry you know knowledge as well so we're taking uh so our sales people have to be technically smart no sales and also un understand the industries they serve which is quite a big ask interesting do you when you recruit sales reps do you recruit them from the specific industry that you want them to then sell to or do you just go find the best salesperson you can that knows how to hit quota uh We've most the latter uh and then we find the industries that they will fit best with um and and that seems to work best some have come okay so just be you find great sales reps and corre them more about the industry we're not Hing a finance person yeah we're not hiring a bio person we have someone who knows these kind of products is really good good at communication good at closing good at following through and then they will learn the industry stuff I see how many folks are fulltime today uh right now about 50 55 I think how many carry a quota uh we don't uh we don't carry individual quotas we have a team we have a company quota uh and we everyone's paid salary we don't do any commission so that's one unique feature so how many are on the sales team uh other 55 including if you exclude customer success and you exclude Partnerships I think it's about 15 okay five and how many are actually writing writing push and code every month Engineers oh oh sorry code um Team size across both the two platforms so 5 plus 515 about 20 20 interesting so did I hear you I hear you're doing the math Did you sort of put five engine did Engineers work on all three products or do you put five Engineers on product one five on two three uh five was on product one and there is another uh 10 to 10 on the other core product and there's another five that do like add-ons extensions and uh you know the but you let them specialize in that same product they don't switch between products Mon and month yes that's correct that's correct 100% very interesting okay why no quotas team coll we found that team collaboration is the key we we did try it years ago and what we found is if it's my deal or your deal we're not going to work together and because the products are complicated and the industries are often interspersed and we have multinational companies if you got a sales team in EMA who's working with a sales team in North America sorry salesp person North America we want them to collaborate we don't want them fighting over who's going to get the Target and that was the main reason very interesting you uh last year you were bootstrapped are you still bootstrapped today we are we've had many offers and uh we've talked to companies we're not in the market yet but maybe what's what's the most interesting offer you got don't name the company but what was the price like what they say want to buy you for 100 million bucks or what uh there's ones that want to do uh probably less than that now because the evaluations are down a bit uh ones that wanted merg one is interesting one that wants us to be part of a manufacturing very very industry vertical approach other ones uh want us to go you know very horizontal across all Industries what was the highest offer you got though Adam that you rejected we honestly we haven't got to a firm firm offer so they they're all talking you know 6X 8X I would say but we hadn't got into milli 80 million something like that right exactly so who someone's listening right now they really love you they really want to partner with you or buy or whatever what is the right partner for you what are you looking for uh for a partner it will be a a firm that that has a service offering a consulting firm that wants to expand their business that wants to be able to extend their range of services uh and is willing to not just sell a product but also build an offering at their company around that service I see and you would consider something between an 80 million and $100 million all cash offer today uh oh sorry uh when you say partnership I think you meant to partner with the company to acquire us um strategic alignment cultural alignment is number one and then the other stuff yes we can negotiate on Equity or cash I have to say the number one thing is cultural alignment all the people here would want to work has to be someone that we all want to work for or at least hand over the company to I don't how much Equity does the team own today what's the ESOP pool you've set up 10% 15% no actually none it's there's no uh I'm so owner that's awesome okay so you own 100% do they have like Phantom shares or anything we we will do that when we if we if once we start uh yeah the plan is once we get near an offer an actual offer we would do that exactly that's exactly right we do a phantom uh stop plan Adam this is very sensitive but you are very rich on paper right do you already have some exit where you're able to go buy the house you want build the family vacation when you want like how do you diversify your net worth out of your SAS company a little bit um yeah great I mean I have all the I have first of I have rental I have real estate rental real estate which is great because it's a nice cash generating asset that's uh low lower growth but very again very safe and gives you that diversification how many beds how many how many beds do you have in your in your real estate portfolio uh three three single family houses okay great uh plus my own house we live in the house that we love the kids have gone are in college almost finished so that's all paid for um so there's not a ton I need it's more it's more the fun of the chase there you go he he keeps his expenses low and makes some money off his real estate which is great that's nice nice nice position to be in now are you guys do you operate right at break even or is the company 10% profitable to 20% Prof uh depending on the year 0 to 10 some years 10% some some years Break Even what do you think this year will be um I would say around 5% just because we the rates a bit lower than we'd hoped I mean still 5% uh profit on 13 million AR I mean that's 500,000 bucks of profit this year that's pretty good right right and that's you know we want to reinvested we don't want to stay on cash so makes sense yep yep yep very cool if you do you just go buy another investment home right yeah yeah my wife's she she wants to go to California so who knows get something out there to rent out and then move there UPS if we can afford California who knows that's awesome Adam all right let's wrap up here with the famous five number one a book you're reading right now oh I just finished reading um it's called The Glass Hotel I forget the name of the author it's a a New York author she also um it's really really good it's a really good book I I really enjoyed reading it I'm also reading another book by David Mitchell called um oh God it's about Utopia Avenue it's about a rock a fictitious rock band from the 1960s which is just a great read he's a great writer he did Cloud Atlas did bone clocks I love all of his stuff amazing number two is our CEO you're following or studying um oh geez uh I always like Richard Branson just because uh but I think I said that last time that's okay you can say it again number three what's your favorite online tool for building the business right now instantly I love instantly uh we just started using that to cold emails and prospecting and it combines the best of Apollo and zoom info and a bunch of tools so I love instantly and guys if you want to hear the instantly story search Latka instantly on your podcast app or on YouTube we had them on the show they went from 0 to $2.4 million run rate very quickly starting off as an agency model moving into sash really cool story there uh glad you glad you liked Adam uh number uh number four how many hours of sleep do you get every night uh eight okay good and except when I'm in jet lag ex when I'm jet I came back from Dubai and I was W waking two in the morning sorry do you have customers in Dubai uh yes we do we just closed our first one a week after the conference actually wait what was that like I mean is it same sales process as in the UK or the US um small C well small companies in Dubai like anywhere they'll buy the credit card easy large companies you got to have an office there presence there you got to do a lot more of that in person what's the what's the inflection point anything below 10,000 contract value credit I would say yeah sounds about right also is it is it a government own Enterprise or is it like a private small like a a lot of firms there are Indian companies that have set up shop there or or of other companies those private companies easy to sell to 10,000 15,000 government entity that's building out a large part of the infrastructure that's a whole different Beast interesting okay so married two kiddos they're out off the college I believe you had a birthday so you're 48 now December 4th so coming up not yet almost okay so still 47 MH all right very good so 47 years old last question something you wish you knew when you were 20 raising kids what a pain uh but we love them um oh don't don't worry about what other people think of you do what you do what you enjoy do what you love and don't let people tell you you can't do it that's what yeah that's what I would say I love that guys in flexure was launched in 2017 they sered customers like large defense Contractors Supply Chain companies mixed of on-prem and Cloud Solutions they'll do a million dollar per month in Revenue up from $830,000 a month just a year ago so nice growth serving 5,500 customers many customers pay have several hundred thousand per year which is great nice expansion there and he's done this all bootstrapped was incredible by Adam he owns 100% of the business company will profit call 5% this year as he looks to continue to scale uh we'll see what happens next Adam thanks for taking us to the top thanks so much Nathan have a good one one more thing before you go we have a brand new show every Thursday at 1:00 p.m. central it's called Shark Tank for Sou we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares backend dashboards their expenses their revenue arpu CAC LTV you name it they share it and the buyers try and make a deal live it is fun to watch every Thursday 1 p.m. central additionally remember these recorded founder interviews go live we release them here on YouTube every day at 2 p.m. central to make sure you don't miss any of that make sure you click the Subscribe button below here on YouTube the big red button and then click the little bell notification to make sure you get notifications when we do go live I wouldn't want you to miss breaking news in the Sass World whether it's an acquisition a big fund raise a big sale a big profitability statement or something else I don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack Community for B2B SAS Founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at Nathan la.com slack in the meantime I'm hanging out with you here on YouTube I'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode and if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive I am on these shows but I do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that I appreciate your guys' support all right I'll be in the comments see you