How Introhive CEO Lee Blakemore grew Introhive to $10M revenue and 50 customers in 2018.

hello everyone my guest today is jody glidden he's been ceo of intro hive since it was founded seven years ago he's a frequent blogger and speaker on topics of sales acceleration especially among enterprises jody are you ready to take us to the top yes i am all right tell us about intro hive what's the company do and are you a pure play sas model yeah sure um yeah we are pure play sas um it's a system that um looks at all of the enterprise data sources uses machine learning and tries to make sense of it uses it it creates various different use cases and applications for helping to accelerate sales things like creating a searchable relationship graph that sales people can use and and a bunch of other things very cool and give us a general sense of kind of pricing what's the average customer pay per month or per year would you say um it depends on the size of deployments we have some customers that are 100 000 employees or more um they get better pricing obviously and then um and then there's smaller companies but somewhere in the uh you know 20 to 25 percent per month range and sorry do that out of actually a company like logo level so on average are you signing up like 30 seats 100 seats oh yeah most of our deployments are are pretty large um as far as normal what you'd normally see in sas we don't really do the normal smb model um we are primarily companies of 500 people uh or more okay we do have a few smaller customers that might have 100 or 200 seats but that would be that would be rare okay and so if the average is kind of 500 or more what would you i mean what does that look like in terms of acv uh yeah we're we're in uh we're kind of in the see the eight digits sort of size now so we're just just kind of we're tripling every year um sorry not you as a company i meant i meant the the annual contract value on on that kind of new logo signing up oh um for somebody of 500 suits yeah yeah um they they're usually you know depending on what products they choose because we have a number of products but uh a lot of companies start with us in around that hundred thousand dollar okay uh a year range cool yeah that's really that's really helpful to understand all right so about a hundred thousand bucks first year acv again huge range but that's kind of a good kind of average middle ballpark kind of thing put this on a timeline for me when did you launch the company uh really at this at the end of 2011 start of 2012 that was when we raised our first money and kind of got more serious about things okay and uh where were you personally at that part in your life did you just quit corporate or what yeah i had just uh we had a pre me and my partner stuart had a previous startup we were acquired by blackberry and that was in 2008-2009 when when blackberry was was uh you know really the top really the only smartphone game in town back then we stayed with them for a couple years took different roles and then and then i left and uh it started this then we raised money shortly after that and stuart jumped over shortly after that's great so how much have you raised to date uh we've raised around 15 million or so and there was no there was never a thought to go on you know let me we we have the money let's just bootstrap this thing um no we did put some of our own money in as well um there's been you know some equity raised there's been some of our own money and there's also been uh we have a lot of our people in canada and the canadian government has also uh helped with some grant money and stuff like that so total financing in is probably closer to uh 20. total from vcs would be closer to 15. yep but my point was though again it sounds like you had some success in the past why raise vc at all why not just keep using your own money um yeah it's just it's a lot of risk you know i think i still believe that it's it's worth it to have a financial partner i'd have a friend who had a very very successful startup where he got i don't know 100 150 million personally and he's tried since then doing two or three startups and he lost most of the money that he you know that he got you can still do very very well getting some financial partners and if you pick the right people you know you you don't really lose a whole lot of um control in doing that yep so 2012 is kind of launch date 15 million raised today and what have you scaled to today in terms of total customers using the platform uh so we're we're around 50 customers or so okay so this is very much kind of a super high acv kind of high touch longer sales cycle kind of process that's right yep yeah we have we have a lot of customers in the you know half a million dollar a year range but we have we've got some in the million dollar or more a year range so it's um yeah it's definitely at the higher end we're starting to move that down so a lot of people started smv and moved their way up we actually started a large enterprise and moved our way down and why is that why were we able to do that well because of what we do it's very very sensitive data so you know we're taking the most trusted assets of an enterprise and we're helping to make sense of it so you have to do if you if you want to do it properly you have to put a lot of time and energy into your security uh encryption all of the architecture of your system to make sure it will work properly and that there's there's no breaches so if once you do that um you know the the next you know i think a lot of people start at the at the smb because they can they can have a really simple minimal viable product and then move up over the years put more and more time into it with hours we couldn't really have a minimal viable product unless we already put a lot of work in so we thought at that point you might as well recoup it by selling into our jennifer yeah it's funny you know if i just view the website entrohive.com and i scroll down i scroll down i mean and don't don't take offense to this this looks like a company that could be from a crm that like just launched yesterday in other words there's there's nothing that i realize wow this enterprise until i get down to our customers and i see pwc and reed smith and i'm going maybe there's something else going on here but nowhere do i see like you know you know the only crm to protect against security breaches or handle your most like sensitive data why don't you lead with that yeah we talk about it a lot in our blogging and in our thought leadership stuff and conferences and stuff but we don't yeah we probably don't make it as front and center as we probably could because i just you know we onboarded a half dozen employees today and one of the things that i've just in the speech uh to them you know the kickoff thing with with the guys was um for a company of our size it's almost done our logos are almost unheard of you know and it's not we don't we're not one of those companies that has you know five seats at pwc you know we've got a hundred thousand seats at pwc and uh it's like that with a lot of our customers our customers are you know giant banks and the biggest law firms in the world and the biggest taxes they're the the most data sensitive uh companies in the world so it's uh yeah i think it's something that's unusual about us for sure just because of kind of how we had to build the solution yeah and you said you just recently passed 10 million bucks in arr uh yeah we're yeah that's that's about right now yeah and then we're and then we're tripling every year we have a goal to triple again in 2019. it's gonna be hard to keep that forever but that's yeah yeah yeah but i mean so if you're doing so you know 10 million run rate today means you're about 830 grand a month and if you just tripled that that means you were doing what about 250 grand just about a year ago per month yep it's been pretty consistently for the last three years we've been tripling almost on the dot um yeah no that's a it's an impressive that's obviously you know they say what is it you know triple three times or triple two times and then double double double and you set yourself up for kind of ipo if you want yeah yeah that's right i mean we have to watch all aspects of the funnel the top of the funnel and the bottom of the funnel to make sure that there's enough leads because if you look at the length of our sales cycles we have to think pretty far in advance in order to make sure there's enough pipeline to have it closed in time but so far i think the guys are doing a really good job what is that pipeline right now what's the what's the timeline uh oh our sales uh it's somewhere around six months uh actually we're just starting to get below six months now on the average so um but but really close to there which you know in the old days it would be like two years so so we've moved that in a lot yeah now it's not like you're starting contract value it's called maybe 100 grand it obviously goes up from there what are you willing to say how aggressive are you being what are you willing to spend to acquire 100 000 bucks of new ar uh yeah you know i i don't think we pay too much attention to our sales costs or our marketing costs at this point because you know it's it's um there's a really good return on the revenue that we bring in since it's high margin revenue um there's a really good return you know our evaluations tend to be somewhere in the 20 times um uh forward ar um uh level so when you're when you're looking at that like if you if you brought in a million dollar deal and you spend a million dollars to get it although we've never even came close to spending that much money but even if we did let's say spend a million dollars to get a million dollar deal um you know there's a great return on that right right now so we're not we're not trying to um be profitable or anything like that we're doing it sorry the payback period has very little to do with profitability that's just a sense of how long of a cash gap do you have to withstand before you get your money is like is it short cash gap or can you afford a longer cash gap since you raised so much money yeah but but we all we have great access to capital and we always have um so you know the great thing that the reason we look at valuation so much as a as one of our metrics is that you know we know that that's a that's a source of financing for us at any time we want to draw on it well assuming the market stays frothy uh well we've got multiple sources that we've got uh we've got debt financing available to us we've got equity financing available to us uh we've got founder financing available to us so if you look at you know the really bad recessions they usually don't take you know the markets usually don't dry up take 2008. markets didn't dry up for more than like a year and a half so you know that's not a big gap to close for us we're not too concerned with it well i mean just to be clear though when you're talking about valuation so right now i mean there's a huge there's a lot of people talking right now in the sas space about this where if the fed fund like if you value a sas company as an asset and you're doing essentially a discounted cash flow model on it i've caught 50 or something really long since recurring revenue you know the discount rate is going to be one divided by whatever the fed funds rate is right now right so if the fed funds rate goes higher every percentage point it goes up but you know right now assassin's coming you could say it's essentially 50x well if the fed funds rate goes from one percent to two percent well now it's only 20x or 25x and if it goes up to three percent it keeps going down so there's a lot of people saying if interest rates keep going up how they're going actually evaluations are going to get squeezed in the sas space so i'm just wondering how you say with such confidence that no matter what you can kind of rely on that valuation for any kind of funding well because i think there's there's two um there's there's two things there one is what's our well you know what's our evaluation uh and you know obviously that's gonna fluctuate at the moment it's it's a very high multiple even if it went to what's seen as a pretty historically low multiple um it's not we we've got a lot of room to move on a you know on a on a typical deal our sales costs and our marketing costs are actually a very very small fraction of the of the deal so i'm just curious like how small though fully weighted it varies pretty widely when whether you're talking about a company like a very very large enterprise with a couple hundred thousand seats you know you might see a sales cost of fifty thousand dollars um or if you're dealing with you know we've we had um we actually had a very large company that that came inbound to us uh as a referral from another customer we closed them in 60 days with almost no sales cost so you know i think um even if we do kind of go you know all out and we're spending a lot of client time on site with the client and everything it's just not even one of the factors that that we really worry about in terms of uh you know should we try to should we try to spend less and get less deals actually that's not what i'm saying i'm actually saying the opposite like you you actually you keep what you use you keep talking about it like it's a negative i mean but i've actually most of the companies that go from like you know that i've interviewed that go from 30 million to 90 million in arr they actually get more and more predictability around they know they can spend a dollar 20 right for a new dollar of ar and so you have to obviously start spending more money to build out your cohort to figure out what you can consistently get no i'm not trying to say you should spend less or less or less i'm actually arguing the opposite oh okay well maybe maybe that's what we're saying then what i'm what i thought you were saying is that we should be spending or we should you know uh be more careful with how we spend our on our sales and marketing costs um but i i just don't you know that's not something when we're looking at our most important metrics the amount that we're we're uh you know spending it's a very small percentage of the overall the things that matter most to us in getting good margins are things like our hosting costs our security costs those are through the roof you know um it's it's very expensive for us to you know deploy private environments for these large enterprise customers i think they're not on-prem stuff are they uh that we do private encrypted cloud cloud so it's like a sas model but uh pwc can own it for example if they want so that's that's pretty expensive for us to do and we're always looking at ways to try to make that more efficient interesting when you look at gross margin i mean are you still though in the 80 85 range or are you lower because of the security the hardware no we're like 85 to 90 percent okay that's right yeah yeah um okay but but so let's ignore cac for a second i'm just trying to get in your head in a sense of aggressiveness so a payback period if you land a 10 month account obviously and you spend a dollar right that payback period is called 10 months but you can multiply both those by 10 and the payback period is still is 10 months i'm just kind of curious from an aggressive perspective are you willing to spend up to a year or first year ac no matter the size to get the customer or or you want to do less than that no no years i think a year is still fine at this kind of stage right now you know the the most important thing for us is if we're not operating in a bubble right this is becoming a very very hot space and um we have to make sure that we it's a bit of a land grab we need to get as many big logos as we can as quickly as we can and do a great job in retaining them so um that's that's our goal our we've got our foot you know fully to the floor and um if in the early days maybe not quite so much but as soon as the space started heating up and you see big potential entrants and things like that let's try to just spend what we need and get get as aggressive as we can not be silly about it but you know i think a first year spending the first year on on sales and marketing costs is fine yeah it makes sense talk to me real quick before we wrap up uh you know obviously churn is critical it sounds like you i i think probably have net revenue retention above 100 at this point is that the case and if so what's the kind of the gross revenue turn per year yeah we have almost no churn so the the um and if you look at it from so the types of customers that we've had uh hit the pause button um essentially our system uh most of the time for most of the use cases that people do it's trying to improve a crm that nobody was using so our system goes in does a bunch of automation and all of a sudden now there's great data in the crm the problem is we've had some organizations where customers have said we need to switch crms because you know we were with this company now we moved to that one or whatever a lot of times that's a two year uh pause so if that happens we have to go pause as well um is that churn i don't know um but other than that with among our enterprise customers we haven't had any any churn at all so so when you look at this on a cohort basis so like so like the cohort you signed up a year ago in october of call of 2017. let's say that was worth three you know 500 000 bucks in acv this year when they're renewing in october what have you expanded that to does it go up to 750 or a million um yeah our expansions haven't generally been that dramatic uh there have been some especially so you know when you have a customer of let's say a thousand people um a lot of times we'll get fully deployed on on day one if you have a company with that's operating in 50 countries uh with 300 000 employees a lot of times we start with you know 10 or 20 000 seats and we deploy a country by country by country throughout the months and years that that follow and then we'll you know add on products and so on so with very large companies there's a lot more dramatic expansion in the smaller companies not so much got it but again that's why people tend to just look like net revenue retention on a cohort because it doesn't matter if you're big or small you just get total churn revenue and total added do you know what those numbers are yet or no you're just growing so fast you're not looking at it um yeah we're not really um i mean we only have about 50 customers right so uh most of them are we have a pretty good split of of um you know large enterprise customers where they're uh we're we're looking at things like how are we moving the the acv from year to year um which has been growing at about 20 30 annually okay by the way that's it that's what the expansion revenue would be then right so you have about a 20 expansion yeah well we're expanding uh the revenue per seat but we're also expanding the number of seats so it's both sides so when you add both those percentages together then it was more like 30 40 or what yeah probably more like 50 percent yeah yeah okay good i mean obviously it's really healthy so um what last question you're on team what's the team size today uh we're 120 125 people that's great and you boarded you said half dozen today yeah yeah the last few weeks we've been doing four or five every week that's great and where's everyone based uh well we got we've got a lot of people in fredericton new brunswick that's where we kind of started with our engineering team and so on um customer success is there customer support we have a team of about 30 or so in chennai india that's r d mostly and some support and then we have our sales team which is we have about a dozen sales people in in london [Music] we have some and uh we have a chicago office now with a half dozen people or so and then a bunch of other people are just first around very good all right jody let's wrap up here with the famous five number one what's the last business book that you read uh just never eat alone number two is there a ceo you're following or studying right now uh probably benioff yeah number three how many what's your favorite sorry what's your favorite online tool for building your business besides your own i'd say um yeah i'd say you know reporting tools we went through a few a few different ones but i love the dashboard and kpi reporting tools well yeah so which one do you use uh we we went from tableau business objects now we're doing our own thing but um sorry the purpose name a tool that sorry name a tool that my listeners if they think like they want to try to could also try it what's a tool that you use to grow the business um [Music] i mean tableau is a great tool okay but you switched away from it yeah was that but you switched away from it yeah exactly it's expensive and we're we're all still kind of in the reporting business so uh we had you know i'm not trying to pitch myself but you know we uh i like i think that reporting is a great thing tableau has a great tool all right number four how many hours of sleep to get every night um you know probably probably seven okay that's not horrible and what's your situation married single kiddos yeah uh i'm single so okay no no kids that you know of no i do have a kid okay you're good you do this good i'm glad i asked all right not married one kid oh and how old are you i'm uh 45 45. last question jody what do you wish your 20 year old self knew um just just to work as hard as you possibly can because it's so much fun and you learn so much yep guys there you have it work hard especially in those younger years when you can and you haven't don't have a lot of responsibilities yet coming from jody founded intro hive back in 2012 today past 10 million bucks or they're about 10 million bucks right now in ar they're about 3xing year over year so healthy growth 50 companies paying them per month very much in the enterprise space 15 that's one five million raised net revenue retention over a hundred percent uh they've got about 125 people in a bunch of different remote locations you know payback periods you know pretty low uh when they do want to get aggressive though you know he's happy to spend about 12 months to acquire the customers in a very very hot space jody thanks for taking us to the top great thank you