How Jellyvision Reached North of $60M ARR With 1,400 Employer Customers Covering 18 Million Employees (Interview with CEO Amanda Lannert)

Introduction and Company Overview

Nathan Latka

00:00Hello, everyone. My guest today is Amanda Lannert. She is the CEO of Jellyvision, one of Chicago's fastest growing tech companies that serves 1,400 customers with Alex, the most helpful employee decision support platform on the planet. Jelly... Jellyvision's been recognized as the best software company and best culture by the Moxies, the Lighthouse winner by the ITA, and a top place to work in Chicago by the Chicago Tribune and Crain's. Amanda, are you ready to take us to

00:24the top?

Amanda Lannert

00:25Ready. I'll try my best.

Nathan Latka

00:27Awesome. Alright. So it sounds like Alex is like your main product, but help us understand what does jellyvision do and and what's your revenue model? How do make money?

Revenue Model and Product Explanation

Amanda Lannert

00:34We make money by licensing Alex to mostly large employers to help them help their employees choose their benefits. So it's an annual recurring license fee based on the number of eligible employees that we mostly license to the jumbo employer market, meaning companies with lots and lots of people.

Comparison to Gusto and Market Positioning

Nathan Latka

00:49Okay. And how would this be different than like a Gusto?

Amanda Lannert

00:52Yeah, Gusto is a full benefit administration platform. They help you enroll employees and manage employees. All we do is help people understand their benefit choices and help them understand the mathematical annual out of pocket costs so they can make good decisions. And you say, well, how is that possibly a big enough business compared to Gusto that's an end to end sort of CRM for people? And the reality is Ford spends more money per car on health

01:18insurance than it does steel. And one in four of their employees would rather clean a toilet than think about their benefits. And so we just drive really, really good decision making around health insurance to help reduce the cost of confusion on overall care. We save employees and employers a ton of money on one of the most expensive decisions they make in a given year.

Nathan Latka

01:36That's fascinating. So right now, how many employees are under a brand that pays you?

Customer Count and Employee Coverage

Amanda Lannert

01:42Total, we have 1,400 customers that represent 18,000,000 employees.

Nathan Latka

01:47Wow, that's a lot. Okay, that's very good. And mostly U. S. Based?

Amanda Lannert

01:50All U. S. Based largely because we're the only country that really has messed it up so that employers are in the game. Other countries have nationalized health care and no health insurance to pay for it. So it really is a very uniquely American phenomenon in large part.

Nathan Latka

02:03That's fascinating. I want to put all this on a timeline here in a second. But first, you mentioned kind of enterprise many times. Kind of how enterprise are you? So on average, what are these people going to pay you per year for this kind of thing?

Pricing Per Employee and Deal Sizes

Amanda Lannert

02:14It depends on the number of employees, but it can be a 5, 6, or 7 figure deal depending on number of employees. And we work with the country's largest employers.

Nathan Latka

02:22Okay. Can you tell me, ignore per logo, like per seat typically? I mean, per employee? Are we talking like a dollar or 10¢ or a $100?

Amanda Lannert

02:31Yeah. Sliding scale, depends on the number of employees you have. And on the teeny tiny companies, you can get it for, you know, $18. A large enterprise, can get it for a quarter an employee a month. Get much, much smaller.

Nathan Latka

02:42Okay. So the most if someone's listening right on the really small, the most expensive would be about $18 per month per employee.

02:50Did I lose you?

Amanda Lannert

02:50I'm so sorry. You just cut out. I literally just I just missed that question. You can edit that out.

Nathan Latka

02:55Yeah, no, no, it's fine. It's $18 per month per employee. That's the most expensive for someone listening

Amanda Lannert

02:55No, really it's per year.

03:01That's an annualized 18 per year and it drops down to a per quarter or less for very, very large employers.

Nathan Latka

03:08Okay, got it. So almost basically almost a little over a dollar a month.

Amanda Lannert

03:12That's right.

Nathan Latka

03:13That's great. Very good. All right, put this on a timeline for me. When did you launch the company?

Company History and Pivot from Gaming to B2B

Amanda Lannert

03:17So jellyvision actually started in '1 form as a gaming company in the '90s that was making... Was very famous for making games on CD ROMs, these things that used to slide into computers that had data on them. So we created virtual game show hosts like You Don't Know Jack and Who Wants to Be a Millionaire. This company then began saying, We're not going to create virtual game show hosts in a B2C gaming space, but we'll create

03:37virtual advisors in a B2B enterprise space. So in 2002, we relaunched, raised a small Series A, which was technically a seed, but we called it a Series A. And our thesis was we're going to go to where there's furrowed brow, where people are trying to do something complicated and boring but important, and we'll talk you through it. Alex isn't the first time we tried to productize and scale what we do. It's just the first time it

03:59worked. We spent the better part of a decade, from 2002 to 2010 thereabouts, really just trying to find innovative ways to sell. And we did projects for large companies operating more or less as a digital agency before Alex happened. Started to get some positive market momentum into 2011, 2012, started to sell directly. And in 2016, it became the company, and it's our sole focus. But it certainly was a longer tailed start than many, many of the

04:27companies featured on this podcast.

Nathan Latka

04:30And how did you know... So so in 2002, how did you know that you wanted to move away from B2C kind of game show hosts and like B2B basically tutors? Yeah.

Amanda Lannert

04:41It was because the the mob is so fickle. And in b to c gaming, you don't need to just have a great game. You need to be really lucky. It is very, very hits driven, and it is very impossible to guarantee a hit no matter what kind of cultural phenomenon you're riding on. It's just a very lucky business, and we had figured we had used up all of our luck so far. And as games moved from

05:05CD ROMs to online, nobody was making money online yet. And we're a company that's been largely bootstrapped, largely run by the other type of VC, not venture capitalists, but vested customers. And so we wanted to figure out how is the way to more predictably create, you know, scalable revenue that didn't rely on a hits driven business that takes a lot of luck to win.

Nathan Latka

05:25Yeah. Okay. So again, you mentioned mainly bootstrapped. How much have you guys raised to date, though?

Funding History and Secondary Round

Amanda Lannert

05:30In total, we've raised 27,000,000, but only 6,600,000 of it hit the balance sheet. We did a $20,000,000 secondary round that closed last year.

Nathan Latka

05:40And and... Okay. So walk me through the psychology, how that affected the team. Who did you offer liquidity options to? Was it all employees or just early ones, etcetera?

Amanda Lannert

05:49There was a line in the sand based on the appetite. Our original, you know, our our series b investors, Sigma Partners, chose not to participate. They kept their chips, on the table. So we drew a line in the sand, and it was based on tenure. It had nothing to do with seniority. It was how long had you been in service to the company and drew a line and then also offered it to our earliest investors.

Nathan Latka

06:10Okay. Interesting. Sorry. The line in the sand for your early employee base, that was based on a hiring date if they were before?

Amanda Lannert

06:10That's exactly

06:17right. We just picked a hiring date that went far enough back we could reward a lot of people, but not so far that we'd be wildly oversubscribed.

Nathan Latka

06:23That's interesting. That's really interesting. And you're just doing the backwards math there in terms of exercise price and things like that.

Amanda Lannert

06:30Correct.

Nathan Latka

06:30That's interesting. What percent of the... Well, okay, hold on. Did it surprise you or was it in line in terms of how many of those early employees did take advantage of liquidating?

Amanda Lannert

06:39You know, it's a very personalized thing. I think I was probably surprised by what everybody did because they all made very personal decisions versus anyone's statement about the growth and success of the business. It's how long have you been there? How diversified are you as an individual? What are your liquidity needs? How bullish are you about the future? There's no one dynamic. Therefore, it was a very, very personal thing that everybody did. I thought it was

07:00really interesting, but I also was very pleased by how many people didn't take chips off the table or left a large portion still to ride. Like, people see still upside potential at jellyvision, and that was pretty cool too.

Team Size, Remote Work and Churn

Nathan Latka

07:12Yeah. No, that is very cool. What do have today in terms of total employees?

Amanda Lannert

07:16Just under 400. Going into next year, we'll be about four seventy.

Nathan Latka

07:20All in Chicago?

Amanda Lannert

07:21Most in Chicago. We're Chicago headquartered. About 10% of our population is permanently remote, but it's more like they start in Chicago and then move and take their jobs with them versus us having a strategy of hiring outside of our town.

Nathan Latka

07:33Yep. Talk to me about churn. Churn's critical in any SaaS company. What is your churn today and how do you think about it?

Amanda Lannert

07:38It's a low digit net positive dollar churn. We've been very successful in having a sticky solution. It does its job. It creates an ROI. And so we stay in with our core product, and then we expand through additional line items, things that help, employers navigate leave of absences or financial wellness or additional add ons is how we grow. But we have a really

08:00lucky relationship with a lot of our large employers with our core product.

Nathan Latka

08:03So when you say a low single digit churn, I mean, so less than 10% revenue churn per year?

Amanda Lannert

08:08It's net positive. Actually grow each year.

Nathan Latka

08:10Sorry, expansion for a second. I'm talking just gross revenue churn before you add back expansion. You said it's 10% or less?

Amanda Lannert

08:10Yes.

Nathan Latka

08:10Okay. And then let's then go to the fun story, which is when you add back expansion, you make up that 10% gap and you're above a 100% net revenue retention?

Amanda Lannert

08:10Yes.

Nathan Latka

08:10How far above a 100?

Amanda Lannert

08:29It changes every year. It depends on what new line items we're taking to market, but it's a, our growth has really shifted from net new. We're seeing a lot of growth in our existing book of business too.

Acquisitions and the Leave-of-Absence Cross-Sell

Nathan Latka

08:39That's great. No, that's really good. It's a fun place to be once you start hitting that scale and realizing introducing kind of higher ACV products across current base can drive a lot of the growth. Did you do any acquisitions to drive those upsells or it's all been built internally?

Amanda Lannert

08:53We've done an acquisition, but it was purely strategic. We wanted to bolt on some technology that would allow us to optimize our pricing to be able to better offer a smarter algorithm. Everything else, all of our growth has been organic. Nothing inorganic.

Nathan Latka

09:06What's been your most successful cross sell product to Alex?

Amanda Lannert

09:11A product that gets into a totally new space, something that helps employees navigate their leave of absence. As an employee, sometimes you need to take more than just vacation days and you probably ask yourself two questions: A, am I going to get fired? And B, am I going to get paid? And there are employer rules and then there are state by state rules that actually legislate how employers have to treat certain types of leave. And we've

09:34created a product that is not only compliant, it is humanistic and very helpful in walking employees through these leave considerations. And that is our most successful line extension by far. It really is sort of a mini business unit in and of itself.

Target Customers: Mid-Market to Jumbo Employers

Nathan Latka

09:47Interesting. Amanda, can you describe to me new logos you're adding today? What do they typically look like? Is a team of 100 or 1,000 or 10,000? The typical starting point.

Amanda Lannert

09:57Yeah, for sure. Our business thrives on complexity. We need large benefit departments that are trying to solve lots and lots of constituencies. So we don't really play, you had mentioned Gusto, we start where Gusto stops. We need hundreds of employees to actually be able to provide the real ROI that you're looking for in terms of plan shifting and tax savings vehicles. Our bread and butter are companies with 10,000 employees or more. We do particularly well with

10:22jumbo employers who have 50,000 employees plus. Mid market to us is 2,000 to 10,000 employees. And then we do Okay 800 to 2,000. But you know, you have a 40 person company, you may not even be offering benefits, let alone needing Alex to explain them.

Large-Account Pricing, CAC to LTV and Payback

Nathan Latka

10:36Yeah. So then is it fair to say if you close on a 10,000 kind of seat account, that $18 seat price point? Mean, year one ACV is going to be 180 easy, 180 ks.

Amanda Lannert

10:44It is. We have a 6 figure average price point for our

Nathan Latka

10:44Yeah.

Amanda Lannert

10:44Large

Nathan Latka

10:49That's great. So let's just use that as an example to understand kind of the... How aggressive you're being on acquisition. So let's assume it is a 10,000 kind of seat account, $18 a seat, $180k first year ACV. Are you willing to pay to get that account fully weighted?

Amanda Lannert

11:01Our CAC to LTV is about 11 to one. Our gross margin payback period is 8.8. We are able to very cost effectively land and keep jumbo employers.

Nathan Latka

11:11Got it. So just to be clear, if you've got an 8.8 kind of month payback, that means you're willing to spend, call it 130k, 140k to get $180k in new ARR?

Amanda Lannert

11:18Yeah, we spend less than that.

Nathan Latka

11:19Yeah, that's great. Okay, very good. And then gross margin LTV, a lot of people... Oh, sorry, gross margin payback. A lot of people do the less aggressive version to say what the payback is. They don't multiply by gross margin on the end. Help explain kind of the importance of that.

Amanda Lannert

11:31Well, it's all about profitable, sustainable long term growth, isn't it? We are a business that has SaaS margins, SaaS revenue, and we need high gross margins to be sustainable. And what we're looking about isn't just, you know, is it cash in, but is it profitable? You know, are we going to have a profitable business in three years?

Nathan Latka

11:49Yep. Are you cash flow positive today?

Profitability and Cash Flow

Amanda Lannert

11:51Have been since 2009. We are also profitable this year line of sight to having substantially improved margins by 2020. So we are a business that has grown through customer revenue, not, you know, venture capital.

Nathan Latka

12:04Yeah. So the 20 was secondary. There was another 6.5 that you said was going into the company that's still all sitting in the bank.

Amanda Lannert

12:09Well, it was $1,600,000 in 2002, $5,000,000 in 2007. We haven't put cash on the balance sheet in over a decade.

Nathan Latka

12:17That's great. That's really cool. Well, you say you're improving gross margins. Where do you anticipate getting most of those points back from? What are your biggest expenses right now above the line?

Amanda Lannert

12:25I think where we're going get gross margin back is improved efficiency and implementation. It's not an off the shelf product. It is configured versus customized by a customer. The better we sort of deliver our product where it feels personalized but it's pretty turnkey from an implementation standpoint will improve gross margin. And then a huge part of it is selling more things. We are building a more and more robust line. Our customers are saying, What's next? And

12:53being able to walk in and sell a multi product solution will help us from a gross margin perspective as well.

Nathan Latka

12:57Yeah, that's great.

12:58Last question here as we wrap up. I mean, can you give me a general sense of kind of ARR size or range that you're at today?

ARR and Recognized Revenue

Amanda Lannert

13:04Yeah, we're north of $50,000,000 in revenue. Our ARR is north of $60,000,000

Nathan Latka

13:10Okay. Walk me through where those are different. Is that just GAAP versus cash?

Seasonality and Annual Business Cycle

Amanda Lannert

13:14It is. We We have a very seasonal business like accountants, but our tax day happens in November. So we book all of our revenue in the year in which we win it, but we recognize it pro rata over the start of a license, which typically starts in November or December. So revenue trails bookings.

Nathan Latka

13:31Yeah, that's interesting. Interesting. So very good. So at a $60,000,000 run rate today, I think what that puts you at about $5,000,000 bucks per month in revenue across 1,400 customers. That means average customers paying in cost $3,500 $3,600 bucks a month, something like that. Does that sound about right?

Amanda Lannert

13:45Yeah. But we really look at it on an annual basis just because of the cyclicality. We don't have a lot of ebb and flow month over month. It really is an annual business just to kind of give you... It's a unique dynamic.

Nathan Latka

13:45So before you're

13:55about $43k a year then average ACV. Yeah.

Amanda Lannert

13:58That's it. We don't lose a lot of business in Q1

Nathan Latka

14:00or Do you have the ability though to upsell or can you only upsell every twelve months?

Amanda Lannert

14:06If we're selling into the benefits solution, selling to our core customers in the core sort of pain that Alex is best at solving at. It is an annually cyclical business. We've tried to bend the will of the market. But it is well, but the good news is we have something a lot of SaaS companies don't. We have a trigger for purchase, and we have a trigger for implementation, and we have a trigger for use.

Nathan Latka

14:27What's that mean?

Amanda Lannert

14:28So in B2B2C markets, you've got to get your customers to buy. You've got to then get them to pay attention and actually implement and go live with your software. And then you need users to come and actually use your software so you can prove value to your purchaser. In our instance, because there is a dynamic period employers get their employees to pick their benefits for the following year, it's where billions and billions and billions of insurance

14:53decisions are made. We get everybody, our employers know that there's this date that they have to have everything ready for, and it forces all kinds of purchasing and all kinds of implementation behavior. And then employees have this like $18,000 carrot. If you don't go through open enrollment, you will not get insurance from your employers. So we have sort of this like carrot and stick that gets employee behavior to change. So user and purchaser behavior are driven

15:15by this annually cyclical business. And also we don't have to have the normal quarterly race to close. We have an annual race to close, and we put all of our eggs in a seasonal basket a year. It's a different selling dynamic at jellyvision for sure.

Growth Rate and Future Capital Plans

Nathan Latka

15:27Before we wrap up here because we're out of time, growth. So you're at 60 today. What were at a year ago in terms of run rate?

Amanda Lannert

15:33We have a five year compound annual growth rate north of 50%.

Nathan Latka

15:37Okay. So make that easy for me. About a year ago, what were we at? Do you know?

Amanda Lannert

15:40That's what I'll give you. You you can engineer that. We'll give you a fifty one percent five year compound annual growth rate.

Nathan Latka

15:47Fair enough. Fair enough. Good. Any plans to raise any additional capital?

Amanda Lannert

15:52Not on the horizon. We're opportunistic. There's a lot of zipping up happening in the marketplace. If we find something that could be accretive, we're always open to it. But so far, we're able to run just through reinvesting cash flow.

Nathan Latka

16:03Yeah, I love that. Any acquisitions on the table you're looking at right now?

Amanda Lannert

16:06We just looked at one today. Nothing worth announcing at this point, but we're always shopping to bring solutions to market.

Famous Five: Books, Tools, and Personal Life

Nathan Latka

16:14Sounds good. Let's wrap up with the famous five. Number one, favorite business book, Amanda?

Amanda Lannert

16:18The Culture Code

Nathan Latka

16:19Number

Amanda Lannert

16:19by Daniel

Nathan Latka

16:19two, is there a CEO you're following or studying?

Amanda Lannert

16:24Justin from Sprout Social.

Nathan Latka

16:26Number three, what's your favorite online tool for building your business?

Amanda Lannert

16:31Lyft. I'm serious. I build my business by talking to really smart people, hiring them, partnering with them, and probably Lyft getting around is probably my most productive thing. I'm spending a lot of time out of the house instead of in jellyvision right now, and that's probably what I use most from a productivity perspective.

Nathan Latka

16:47That's great. Number four, how many hours of sleep do get every night?

Amanda Lannert

16:51It depends. How many hours in my bed? How many hours do I sleep? Let's call it six.

Nathan Latka

16:55Six. And what's your situation? Married, single, kiddos?

Amanda Lannert

16:58Super married, twenty years and counting.

Nathan Latka

17:00Super married, I love that.

Amanda Lannert

17:01I have a pile of kids at home, many and only daughters.

Nathan Latka

17:04How many?

Amanda Lannert

17:06Three. But it feels like a lot. It feels like a lot.

Nathan Latka

17:09That's a lot. And do you mind me asking Amanda how old you are?

Amanda Lannert

17:12How old am I? I am old enough to that question's annoying, but young enough to still answer it. I'm 46 years old.

Nathan Latka

17:18I only ask, I want you to take us back twenty six years. What's your 20 year old self? What do wish she knew?

Advice to Younger Self

Amanda Lannert

17:23Man, if I say go back and say like one piece of advice that I would tell little Mandy, it would be this. Have more audacious dreams. I don't think by saying you're going to change the world, you will. But it's you sure can't do it if you're not intentional. So I wish I had been more aggressive, more hungry for impact and for scale and for growth instead of just running a nice business. Wish I'd wanted to

17:43change the world coming out of the gate. So I would tell young people, be bold.

Nathan Latka

17:472002 jellyvision really got going. Alex started taking shape, helping employers more efficiently work with all of their employees to pick the right plan for them, save a lot of money, drive a lot of efficiency. They're working with over 1,400 companies right now, over 18,000,000 employees. They're doing this basically bootstrap, $27,000,000 raised. A lot of that was secondary. They're growing healthy year over year, doing about 60,000,000 right now in terms of run rate. Over 100% net revenue

18:12retention and over 90% gross revenue retention annually. Again, eight point eight month payback period, so healthy growth. 400 people based in Chicago. Look to add additional products related to, you know, paid time leave and do I get fired and how's that all work? Expanding rapidly. Amanda, thanks for taking us to the top.

Amanda Lannert

18:27Nailed it.

Nathan Latka

18:28Boom. Am I hired?

Amanda Lannert

18:29Nailed it.