How Interweave Smart Solutions CEO Bruce Magown grew Interweave Smart Solutions to $6M revenue and 4K customers in 2018.

hello everyone my guest today is bruce mcgowan as the chief executive officer president board member and investor in integration technologies and the creator of interweb smart solution bruce brings customer focus solutions in response to customers needs to the digital age he served as ceo president board member and investor in secure digital the company that developed secure voice the voice data and video encryption solution designed to pass fips 142 certification and 2000 brew service ceo cfo and head of the audit committee an investor and board member of the uncommon media group and also served as president chief operations officer of noaa corp a privately held company focusing on interactive and media rich solutions bruce are you ready to take us to the top i hope so all right what is interweave and is it a pure place sas company as you focus on the crm space it is a it is a pure place sas company um what it's the origin originations were uh we're competing with tibco webb beyond a number of uh very large corporate integration engines and we morphed from about 2004 to 2006 when we met salesforce into a sas pure play took us about actually uh three years to convert that to a pure sas environment we we are currently at rackspace manage hosting uh been there since 2006. sorry okay so what do you mean by that you are acquired by rackspace no that's our isp okay i got it yeah so let's just focus on on on the company right now and by the way there's a lot of coding same interweave you're interweave.biz correct we are at century smart solutions dba the company's integration technologies yeah yeah that makes sense so give me a customer story i mean how's the customer using you i think a good customer story there's a number of others when we came into a salesforce sales source of financial applications quickbooks the sagemastline microsoft dynamics oracle all that the original customers were focusing quickbooks in 2006 at that time there weren't that many solution providers out there so we came forward and worked with a number of them to create what they wanted but in a configurable way that's the distinction here so what we've done is it's all objects all transactions and salesforce all objects all transactions in quickbooks and it's your choice via configuration so that's what's quite distinct so as far as business processing workflow the customer can implement theirs as opposed to buying a pre-programmed business process workflow from another vendor okay try and break this down well help me understand i mean are you going to after smb mid-market or enterprise smb mid-market typically i mean we've the the smallest customer has won the largest customers five it really is we are we are crm focused we are a crm integration platform with intelligence so bruce try and break this down to a price point for me what's the average customer pay you per month for access to your tech um the annual is anywhere from 999 to 14.99 typically one thousand five hundred yes okay okay so 1500 per year is a good average yes and and how how why would they pay more or less what are your pricing axes that you price on it really is uh we have four models so we have pro premier small business enterprise and it really goes to the type of integration the customer is looking for is it just ar focus and specific is it ap focus sorry try not to use acronyms yeah accounts receivable guidance or the combination of both i mean some customers get into very heavy multiple quickbooks company files by by currency by line of business multiple price books uh we we go very heavy and into inventory warehouses locations all these types of things so that's kind of one of the distinctions coming forward that interwe provides over others and would you say your main focus is kind of billing and financial platforms or is it more towards kind of databases and other web services no it's really focused on number one being financial integration uh solutions uh second would be uh billings and subscription we currently integrate with about 47 merchant service providers so we do quite a lot in subscription-based billing uh bringing that forward between the solutions itself and then we additionally ecommerce database we have typically i think right now 27 protocol specific adapters so if something has you know a protocol the way to work with it we can we can work with that and bruce put this on a timeline for us when did you launch the company what year 2000 2006. 2006 okay and over the past what is that 12 years how many customers have you scaled to um we've done about 8 000 today okay just be clear those aren't free unpaid they're just paying customers that's correct yes okay that timeline correct that's well and today you still have about eight thousand paying a little bit less but where we're the kind of focus in uh we've been very salesforce specific for a while there's two new vendors we're working with which is oro crm and bpm online so that's what for example uh bpm alliance when we opened our boston office in may of this year so uh very sharp uh very focused like a young crm salesforce so bruce sorry just be clear though so today how many companies do you have paying you for your technology about four thousand okay about four thousand got it so the people so basically what you gave me that eight thousand number was kind of anyone who's paid you anything over the past 12 years that's that's correct yeah so so the the the 50 of those folks that have essentially churned out why do they churn i think um for a number of reasons uh they could stay with uh you know arr they could stay with the uh crm vendor their wish they could they could stay with the financial solution that they're they're with some customers i mean for example uh started with quickbooks they wanted the sage line others have gone right to microsoft dynamics so it kind of depends on their needs um hubspot is a big competitor uh so i mean it really depends on their growth cycle their patterns and where they want to go and can i take kind of 1500 bucks per year average times that 4 000 today i mean that would put you at about 500 grand per month right now in revenue is that generally accurate that's pretty close yeah and and what were you doing in understanding growth rate where were you about a year ago oh no do you know i don't care not to check do you know generally are you doubling your over a year or maybe 30 year over year growth 30 about 30 yeah okay and are you doing this bootstrapped or if you raise capital no we bootstrapped it we're we're in the position right now we're coming out with a new branding and that's we're in the conversations with gartner currently those types of things uh i think we're moving more towards an intelligent crm integration platform as opposed to solution specifically does that tie back to kind of your decisions on funding yes very much well we we we focused in on being intelligent solutions and the ability to configuration to create the integration solution you wish i i think now with the extensions into more crms i think an intelligent crm integration platform is where we where we are and how we want to brand going forward sorry okay i'm confused so you bootstrap by the way impressive growth for bootstrap but you then immediately added kind of these other things you're working on are those direct is that are those directly i mean are you thinking about raising to build those things are they correlated it's it's the way we started in in the enterprise i mean we were a acs acs yeah out of dallas was the first customer i mean the first price point was 1.5 million dollars um that went down when you come to the salesforce the price point is what you know 48 dollars per month per license per user so we were an enterprise engine to start with what we've done we went then into specific sas solution focus and i but what's underlying is the platform so as mulesoft was acquired by salesforce i think that's the direction we should go as an intelligent crm integration platform what will help you beat mulesoft well i'm not going to other crm vendors that are coming up like orocrm like bpm online and others that i think would be a target market for us so you're just going to focus on being kind of the switzerland in between all of them we work with about seven currently yeah i think um you got to focus on what's what sales sources are what 10 billion currently they're going to 20 billion it's a pretty big company i think they've met as far as vendor acquisitions they're pretty focused in there they're achieving what they wish the other crms that that are coming up i think they're in the process of doing that and i think that's where we can add value bruce what's your what's your team look like today how many folks um very light we have six people uh uh six people in out of toronto we have uh 12 people out of uh out of uh russia okay toronto and russia so about 18 total yeah right that's great so i assume since you're bootstrapped you're casual positive correct we try to be yeah yeah well sorry i guess what i'm asking is if you do spend more than what you make in a given month do you just keep funding the company you just put more your own personal capital in or how do you how do you bridge that gap we do yes okay so so again how do you think about that in terms of kind of your overall life perspective are you just kind of any money you have sink into the company this is the long game or is it something you want to kind of exit and then go into something else well it's a long game i mean it's been a long game for quite a while i think right now it's a focus three year march and that's where the rebranding uh working with companies like gartner is is the focus for us so coming out to a bit more like a platform play again is is where we want to go are you in in terms of churn i mean you gave us kind of like last 12 years data but when you just look at the past 12 months what's your revenue trend look like annually is it 50 percent yeah it's revenue churn is more like uh 20 to 25 okay so that's right in range with with a lot of companies we talked to do you see a lot of expansion revenue to make up for that loss well that's depending getting up i mean what we've done in salesforce there's there's quite a lot there uh there's payment gateways there's customer portals um on and on that really we haven't brought forward to market yet the focus now is bring those forward to the new vendor partners okay yeah so so back so the question is i mean are you driving expansion revenue that more than makes up for the 25 you lose each year correct yes absolutely more than 25 expansion i certainly hope so yeah closer to 40. okay 40 expansion okay and and most of that expansion is coming from new product add-ons or new seats what's the pricing axis you're driving the expansion you know it's um it's representation of existing existing solutions in a different format i mean we've done a lot in the salesforce ecosystem we haven't brought that forward to oro crm sugar crm bpm online suite crm i mean that's where we need to go now is bringing what we've done and developed in the original crm ecosystem to our new vendor partners and what i'm trying to do is draw the correlation between those new product lines and how that actually drives expansion right uh that's what i'm trying to understand so do you increase pricing when you bring these new products that you write i only have on salesforce on oro no actually we don't okay so how do you drive 40 revenue expansion um with the new vendor partners they're they're we're being received very well their customers waiting and we're that's we're going there as quickly as possible there's customers waiting with these new vendors yeah those are new customers where the expansion is yes expansion though is typically on you signed up a hundred people 12 months ago on just on that cohort how are you getting them to pay more not where you're getting your new customers today yes i mean for example the payment gateway uh the customer portal we have other solutions that we add on past 14.99 for example okay so you're you're basically product-based upselling we are certainly in every in every way modules of your 18 people are there do you have people specifically dedicated to upselling and sales um no not currently that's where the expansion comes with the new product vendor partners are you so in terms of getting new customers do you have a kind of a model down for your what your cac looks like or no um it's it's being developed in light with a new the new rebranding and that's going to be typically in q1 that's going to be available so it's we're working pretty hard in the background here right now on developing that and bringing that forward what do you sorry what do you mean by developing cac are you running marketing experience now to figure out how much it costs you to get a new 125 a month customer we're we're commencing work with gartner yeah sorry i don't know what that means oh are you familiar with gartner yeah i know gartner but when you say commencing work with gartner it could mean a variety of things you could have a product partnership you could it's a rebranding strategy that's where we're focused okay yes so sorry i don't understand how it's going to help you figure out cac um the we need to get there first i think that that's where i want to go the the rebranding strategy consists of a new website uh new offerings new vendor partners when i have that then i can i can i see that cac is not a priority right now your number one priority is the rebrand correct got it yep got it very good all right bruce let's wrap up here with the famous five number one what's your favorite business book you know there's a couple we've been looking at it's kind of funny because um with the boston in light of being in the boston market is belichick and brady and also chatterheads um since i do like boston quite a bit i mean we we started there a while ago that's kind of the fun one um one book is great bruce is there one that you well silicon dragon how shawn is winning the tech race okay silicon dragon yeah very good number two is there under the radar ceo you're following or studying um sas uh the gentleman from sas tr uh we uh we follow um saster yep jason lumpkin absolutely number three uh what is your favorite online tool for building your company i'm a linkedin fan okay number four how many hours of sleep to get every night not enough i'll probably be six okay and what's your situation bruce married single kiddos married to 34 years oh congratulations how many kids annie two two sons two boys uh in hartford and uh my uh younger son just joined i advise in boston oh very good and how are you i am 65. 65. last question what do you wish your 20 year old self knew um i think focus is is the word and perseverance is is where i would go and at the same time i mean continuous innovation is a big thing with our company so you you have a objective you want to meet and if you're not listening uh to really to customers and other valued entities here along the way i think that that's uh that's required to be at 20 years old be listening at all times guys be listening be focused coming from interwe founded in 2006 a crm tool that essentially it will integrate or interfaces with crm specifically in a billing and financial capacity tying these data sets together erp web services along with databases really honestly in a hub and spoke model today they've scaled to about 4 000 total customers paying on average 125 bucks a month so that would put them obviously at about 500 grand per month right now in revenue up from about 375 grand just about a year ago so caught 30 year-over-year growth still maybe a tad casual positive as bruce continues to fund the business but they're doing this all bootstrapped which is impressive 18 people based between toronto and russia 25 revenue churn annually that's gross 40 expansion so net revenue retention about 115 not sure what kakan payback period is right now because he's focused on a big rebrand with gartner bruce thanks for taking us to the top all right thank you