How JustCall Reached 1,600 Customers and 106% Net Revenue Retention with Zero Sales Commissions (Interview with CEO Gaurav Sharma)

Host Intro and Guest Background

Nathan Latka

00:00Just got done editing this interview. You guys are gonna love it. Before I do that though, I want you to know that I'm going to be in the comments for the next thirty minutes or so answering your questions. If there's additional questions you want me to ask the CEO next time I interview them, leave them below. Or if you're just loving the data points I get CEOs to share, click the thumbs up button below. That's your

00:18way of telling me you're loving this stuff, and I'll get you more of it. Additionally, again, I'll be in the comments answering any questions you have. Alright. For thirty minutes. Enjoy the interview. Hello, everyone. My guest today is Gaurav Sharma. He's a founder and CEO of SaaS Labs Inc, maker of JustCall. He's a chemical engineer by education but loves writing code. He's a four times entrepreneur, has two exits, sold the last business to the New York

00:38Times. He's now an active angel investor in SaaS companies. Gaurav, you ready to take us to the top?

Gaurav Sharma

00:44>> Let's do it.

HelloSociety Exit and Background

Nathan Latka

00:45Alright. So first off, tell me about this company sold to the New York Times. Is it a media company or what?

Gaurav Sharma

00:50>> Yep. It was a advertising tech company. So I was running it from Santa Monica. Yeah. So we we were doing so we were, like, probably the biggest players in influencer marketing.

Nathan Latka

01:00What was the name of the company?

Gaurav Sharma

01:02>> HelloSociety.

Nathan Latka

01:03Okay. Got it. And when what year was that exit?

Gaurav Sharma

01:08>> 2015, I guess. It was '15.

Nathan Latka

01:10So a while ago, not at this point. Did they did they can you give me a general sense? I mean, was that a really good exit for you or breakeven or, like, you know, f u kinda money?

Gaurav Sharma

01:18>> Not really f u, but it was a good exit.

Nathan Latka

01:22All right. Let's talk about JustCall now. So what does JustCall do and what's the revenue model?

What JustCall Does and Pricing Model

Gaurav Sharma

01:26>> So JustCall is a cloud phone system for sales and support teams, and it integrates with all your CRMs. So it just automates all the call logging and recording and everything. It's a pure SaaS business, which are like $25 to $50 per user per month. Pretty straightforward business model.

Nathan Latka

01:46Yep. And how many users do teams typically sign up with?

Customer Count and Average Revenue

Gaurav Sharma

01:49>> Yeah. So we have about 1,600 plus paying customers.

Nathan Latka

01:54Users or brands?

Gaurav Sharma

01:56>> Yeah. Businesses. Businesses. Okay. I mean, yeah, businesses.

02:01>> And they're paying about on an average $150 a month.

Nathan Latka

02:05Okay. Very good. So 15 $1,615 a month. So what you you have like it's like team size. It's typically like five to 10?

Gaurav Sharma

02:12>> That's a sweet spot for us, and that's average.

Nathan Latka

02:14Yeah. Okay. And then, I mean, you you told me before you listen to every episode, so, you know, I'm gonna do this. Can I take the 1,600 customers times a 150? You're doing about $240,000 a month right now?

Gaurav Sharma

02:24>> That's right.

Nathan Latka

02:24Okay. And where were you a year ago?

Gaurav Sharma

02:27>> About 80,000 a month.

Nathan Latka

02:29Good growth. You know that's good growth. You've done this before. Where did you get most of the growth? Was it new customers or expansion revenue?

Growth Drivers: Integrations and Expansion

Gaurav Sharma

02:35>> I think it a mix of both. So we worked a lot on our integrations. So integration gives us free customers. So we haven't spent any money on ads till date, and we are now getting and investing money into marketing now, but we haven't done that. We get a lot of natural organic expansion because people come with support team, then they bring their sales team. So it's a natural expansion going there, and then there's upgrades from $25

03:01>> to $50 for each of the month.

Nathan Latka

03:02Mhmm. What are driving most of the upgrades? Like, is there a utility based metric or is it all feature based and seat based?

Gaurav Sharma

03:09>> It's it's mostly two ways, seat based or it's feature based. Okay. So once they start liking it and they want to get more out of it, we they just go for a bigger plan.

Nathan Latka

03:20Okay. So there's no, like, thing you measure, like number of calls per month, you know, things like that?

Gaurav Sharma

03:26>> And these are though there, but we really can't predict those. So we never really put pricing on that.

Nathan Latka

03:32Okay. Got it. So just feature based upselling and seat based upselling for now?

Gaurav Sharma

03:35>> I mean, we know that we know that if it's a sales team, they're gonna be needing more powerful features on sales. So let's build those features and put them in the premium plans.

Nathan Latka

03:43Yep. Now you have on your standard plan, it's just it's one phone number and one team member. And and, again, if they won't go anything above that, it immediately gets up to 50 per user per month.

Gaurav Sharma

03:51>> No. I mean, you can you can use the drop down and increase the number of users from there and you'll see the bill.

Nathan Latka

03:56I see. I see. I see. Okay. So is that does it stay flat? Like, if I go all up to 20 customers, it's just 20 times 25, or is there discounts?

Gaurav Sharma

04:03>> No. We play we play some something there. So on a standard plan after fifteen fifteen accounts, you get, like, 10% discount.

Nathan Latka

04:09Oh, yeah. I'm seeing that. Very good. Okay. And how'd you so take me back. Put us on a timeline. When did

04:14you launch the company?

Gaurav Sharma

04:15>> So we launched the product on Product Hunt on six second December two thousand sixteen, but we really got our first customer in March 2017.

Nathan Latka

04:24Okay. March 2017. When did you write the first line of code?

Gaurav Sharma

04:29>> September 2016.

Nathan Latka

04:31Okay. And how much did you spend on the MVP before your first dollar revenue?

Gaurav Sharma

04:35>> Not really. I mean, we've we've been, like, bootstrapping. So I don't know. Twenty twenty k maybe.

Nathan Latka

04:41Okay. And who's we? What's your team look like?

Gaurav Sharma

04:43>> So now the team has grown up. I mean, we have about 35 people. We just hired today about eight eight more people, so it'd be, like, 43 now.

Nathan Latka

04:50What were those eight people? Sales reps? Or

Gaurav Sharma

04:53>> Yeah. Like support and sales.

Nathan Latka

04:55Yep. So how do you mean, what are you most nervous about in terms of seeing if these eight hires will pay off?

Gaurav Sharma

05:04>> I think on the sales cycle sales side, yes. I mean, they should start kicking in from probably third months or so because all our numbers are depending on number of humans we have. So Yep. The maths will work only if they work.

Nathan Latka

05:17What what have you put so let's say I'm joining I just joined you today as a sales rep and my base is $30,000. Yeah. And then let's say I do hit my quota target. Right? What is the quota target for these new sales reps?

Sales Motion and Demo Conversion

Gaurav Sharma

05:29>> See, our sales are pretty much they're not really sales sales. I mean, we have a very strong inbound interest. So all you have to do is give a good demo. That's all. So our metric is just the percentage of conversion. So we normally convert like 60% demos into paid customers. So we really don't have such whatever salary and all that. So there's no it's

Nathan Latka

05:54all it's all based. There's no commission. Yep. I see. Okay. And so As of now. Yeah. Fill out the rest of that funnel. So 60% demo to paid. Each month, how many new trials are you getting?

No Free Trials and First Month Discount

Gaurav Sharma

06:06>> So another one thing. So we don't give any free trials. So our first month is at 70% discount. So that's the unique sort of way we figured out, you know, so just to make sure that we are not losing any money because we are bootstrapped. And So how how many how

Nathan Latka

06:19many demos are you doing per month?

Gaurav Sharma

06:21>> About two two twenty, 200, two fifty.

Nathan Latka

06:24Okay.

Gaurav Sharma

06:25>> Yeah. And we can work about one fifty customers. We get about one fifty new customers.

Nathan Latka

06:29You said a 150 new customers or one fifteen?

Gaurav Sharma

06:32>> One fifty, one five zero.

Nathan Latka

06:33150. That's that's more than a 60% conversion rate.

Gaurav Sharma

06:37>> Yeah. I mean, it can be like 200 demos at times, so I'm just giving an average. Yep. It's about 200 something demos and, like, one forty, one fifty about so about 60%. Because I have stopped counting those last few months when when I got a leader for that. So yeah.

Nathan Latka

06:54So, I mean, if you're signing up a 150 new customers per month at a $150 a month, I mean, what you're adding, like, $20,000 in new MRR per month?

Gaurav Sharma

07:01>> That's almost like 200 k ARR. Yeah.

Nathan Latka

07:03Yeah. That's, I mean, that's obviously a healthy machine you got cranked out.

Gaurav Sharma

07:06>> People actually eventually expand. They start with a smaller team. Right? I mean, they start with a single or two people team, and then they expand. So, obviously, not really always, but yeah.

Nathan Latka

07:14Maybe more like five or ten thousand in new in true new MRR, but they expand.

Gaurav Sharma

07:18>> Like, whenever it's about 100 k a month.

Nathan Latka

07:21Yeah. Now expansion is critical then to your model. New seats, new features. Over the past twelve months, what was your expansion revenue?

Net Revenue Retention and Churn

Gaurav Sharma

07:29>> On average, we are doing about can't give you the number. Mean, especially because I haven't measured that way. It's almost about 106% as the retention, what do you call it?

Nathan Latka

07:40Net revenue retention? Yeah. Yeah. What was gross revenue churn over the past twelve months?

Gaurav Sharma

07:48>> It's so we can we just measure it on a monthly basis. So it's almost about 3% revenue churn, 5% logo churn.

Nathan Latka

07:56Okay. So 3% monthly revenue churn. I mean, if we extrapolate 36% annually. Right? If you then add back another 42% in expansion, that gets you to your 106% net revenue retention number.

Gaurav Sharma

08:08>> That's the right math. Yes.

Nathan Latka

08:09That's good. And then so take me back to getting these customers. Again, you just bring on salespeople. You have a good idea. I imagine what your CAC is. What's it cost to get a $150 a month customer?

Gaurav Sharma

08:19>> It costs us about the same, like, $5,200.

Nathan Latka

08:21Okay. So you're getting paid back in I mean, you're getting paid back pretty pretty quick then.

Gaurav Sharma

08:25>> Like, month?

Nathan Latka

08:26Yeah. Do you wanna get more aggressive there? I mean, a lot of people say that whoever can spend the most for a customer will get the customer and you're not spending that much.

Gaurav Sharma

08:33>> Now we're gonna spend. So what is the plan for last two years was, do you know, accumulate enough money to pay people for next twenty four months? So now that we have money in the bank and we are safe for next two years, now we can spend money.

Nathan Latka

08:46So what does that mean? I mean, how much money do you need in the bank to feel that kind of safety?

Gaurav Sharma

08:52>> About about

08:54>> $250,000 to $500,000.

Nathan Latka

08:55And what's the math you're doing there? You're taking 500,000 divided by what?

Gaurav Sharma

08:59>> No. So it's like what's what's my monthly spending on the salaries and the rent and multiply by that by 24.

Nathan Latka

09:07Okay. Got it. Got it. So so you're basically, you're including in our salaries and rent. Right? So if you're planning for twenty four months of that, that's $20,000 a month in salaries and rent.

Gaurav Sharma

09:16>> See it tomorrow, then we are safe for next twenty four months, and we can always build you something new.

Nathan Latka

09:21So, Gaurav, just to be clear, 500,000 divided by twenty four months is $20,000 a month. You're basically saying your rent and your salaries is about $20,000 per month right now.

Gaurav Sharma

09:29>> That's alright.

Nathan Latka

09:29So is it I mean, if you're doing $240,000 a month in revenue minus your rent was I gonna say you're you're like extremely profitable. Yep. Like what percentage? What are you taking to the like 60% EBITDA margin?

Gaurav Sharma

09:43>> Yeah. That's close.

Nathan Latka

09:45That's amazing. Well, I mean, okay. So let me ask you different. Let me shift gears here then. Right? How do you personally and your founding team, how do decide what to do with that money? Do you keep it in the business for the best return? Do you pay out dividends?

Profit Sharing and Team Incentives

Gaurav Sharma

09:56>> We don't really pay out dividends yet. I mean, we do profit sharing with the team members.

Nathan Latka

10:01How's that structure?

Gaurav Sharma

10:03>> So what we do is we take out about 20% to 30% of the profits after the year end, the financial end. And then we have this formula built in where the money is divided among people depending on that formula. So form lights, it's actually based on how for how long you're with the team, your performance, and there many metrics there. So people make some good money end of the year.

Nathan Latka

10:26Interesting. So if you're lot with the team longer, you get a couple, you know, higher percentage.

Gaurav Sharma

10:30>> So that's the page, like,

10:32>> every day at SaaS Labs is more sort of valuable than previous day. That's gets a good retention strategy. And then what about performance? Obviously, a salesperson performance is very different than a engineer's performance.

Nathan Latka

10:42How do you measure an engineer's performance?

Gaurav Sharma

10:44>> So what we're doing now, we just started recently. So what we're doing is for every action, there are some points. So let's say there's a push, there's a critical customer solution, something like that. Or if those engineer helped in some closing some sale. So there are points attached to that, and we just track on those basis. It's not really clear to me. I mean, the guy who's adding the team knows it better, but that's something what

11:12>> we do around points.

Nathan Latka

11:13Yep. Okay. So I mean, does it boil down to like number of lines of code push kind of?

Gaurav Sharma

11:19>> That's not really the right thing to track. That's one of the factors. Yes. It's more about how much influence you're creating on the business itself. It So also includes how good you are with support teams and how good you are with sales teams.

Nathan Latka

11:32Measured by, like, response times to salesperson email?

Gaurav Sharma

11:36>> Yeah. I mean, maybe like how you help the support or customer success team to save a deal or how you help the salesperson to close a deal by doing some sort of customization or something.

Nathan Latka

11:45Interesting. I just I'm asking these questions because I imagine this is just very difficult to build this formula, which is why most people haven't done this at their own companies.

Gaurav Sharma

11:54>> Yeah. I mean, it's it's evolving all, like, every month.

Nathan Latka

11:57Yeah. Okay. So so bootstrapped taking 60% of your $240,000 a month to the bottom line. So call it a 150,000 ish dollars in free cash flow. How many engineers are on the team?

Engineers and Quota-Carrying Reps

Gaurav Sharma

12:08>> We have about fourteen, fifteen.

Nathan Latka

12:1014. And how many any quota carrying reps or none at all?

Gaurav Sharma

12:13>> None. None.

Nathan Latka

12:14I love that. Interesting. Okay. Very good.

Gaurav Sharma

12:17>> And then so I mean, any plans to raise capital, pour money on the fire or no?

Debt Financing via Stripe and Clearbanc

Gaurav Sharma

12:23>> I mean, I I think we are we are we are liking the debt part of it. Like, we we we got, like, some debt. I mean, just raised some debt from Stripe, like that $25,000 and just to play around with, like, how it works. Then we're also talking to Clearbanc to get some $50,000 to $60,000 to, you know, pay to some of the agency that we are hiring. By the way, we just hired Ali like, from your

12:46>> show for one of our SDR operations.

Nathan Latka

12:49Ali Oop?

Gaurav Sharma

12:50>> Yeah. Yeah.

Nathan Latka

12:51Good. Good. Are you are you liking working with him so far?

Gaurav Sharma

12:55>> So we just signed the the contract, and it's gonna start from October 12. And that happened after watching your episode.

Nathan Latka

13:02I love that. Yeah. He gave a great episode. Tell me real quick about the Clearbanc thing. You're like, look. I mean, a lot of entrepreneurs don't do the math on the capital because if you if they give you, call it, $50, and they will market it as, like, no interest rate, but no, there isn't. There's a fee and it's usually on a two month term and it's usually 6%. So the effective cost of capital is typically

13:2236% kind of APR. It's very expensive. Does your math match that?

Gaurav Sharma

13:27>> Yeah. So it's actually like a six months payback and that's like six ish percent, so that's 12% a year. And if I can generate ROI more than 12%, I mean, it's a positive for me. So that's free money for me. Right?

Nathan Latka

13:39Are you sure that is all the cost? The reason I'm asking is I know what their cost of capital is, and they would be losing money on that loan to you at 12%.

Gaurav Sharma

13:48>> That's that's what we have done till now. That's about 12%.

Nathan Latka

13:54That's interesting. I

Gaurav Sharma

13:56>> think it also depends on, like, what's our who is doing the deal and how much the amount is. So for some people, the deal will be better than the others.

Nathan Latka

14:03Well, much how much money are we talking here?

Gaurav Sharma

14:05>> 50 k.

Nathan Latka

14:07Oh, okay. So this is like one, what is that relative to your AR? This is like a very, very small percentage.

Gaurav Sharma

14:13>> Yeah. Yeah. Yeah. So I say. Yeah.

Nathan Latka

14:17Interesting. Okay. Very good. Would you mean, so you like debt to drive growth. I mean, would you ever go do, like you know, you're doing 3,000,000 in AR. There are some firms that would go do, like, a million dollar kind of round with you. I mean, do you know where you'd so the thing is with you is you have cash flow. Right? So you don't really need money. Do you know where you'd spend a million extra

Gaurav Sharma

14:34bucks?

14:34>> So that's what we're learning. So the 220 will be about that, how to spend money and to I don't know. Then we'll figure out. But I I don't think we'll be raising money for next one year or so.

Nathan Latka

14:45Yeah. Yeah. Very good, man.

Famous Five Rapid Fire Questions

Gaurav Sharma

14:46>> Alright, Gaurav. Let's wrap up here with the famous five.

Nathan Latka

14:49Number one, what's your favorite business book?

Gaurav Sharma

14:52>> Built to Sell.

14:53>> Built to Sell.

Nathan Latka

14:54Number two, is there a CEO you're following or studying?

Gaurav Sharma

14:57>> Jeff Bezos.

Nathan Latka

14:58Number three, what's your favorite online tool for building your company?

Gaurav Sharma

15:04>> Either Basecamp or Intercom.

Nathan Latka

15:06Number four. How many hours of sleep do you get every night?

Gaurav Sharma

15:10>> That's a tricky one. I mean, I I don't know. Four, five hours.

Nathan Latka

15:13Okay. And what's your situation? Married, single, kids?

Gaurav Sharma

15:16>> So married, no kids.

Nathan Latka

15:18Okay. And okay. Married, no kiddos. How old are you?

Gaurav Sharma

15:21>> Thirty thirty one.

15:23>> 31.

Nathan Latka

15:24Last question. What do wish your 20 year old self knew?

Gaurav Sharma

15:27>> Build a SaaS product.

Nathan Latka

15:30Guy, it makes sense he's saying that. Right? JustCall sitting on $240,000 a month in revenue up from $80,000 a month a year ago, taking a $150,000 a month to the bottom line, so hugely profitable. They're also bootstrapped. Team of 35 folks, 14 engineers. Just hired eight more today on the sales side to crank through more demos doing, call it, 200 ish demos per month, adding a 150 ish new customers per month as well. So call it

15:52$10,000 ish in new MRR every single month. Founded in 2016, now serving 1,600 customers, helping them with their cloud phone system across their teams. Gaurav, thank you for taking us to the top.

Gaurav Sharma

16:03>> Thanks a lot.

Nathan Latka

16:06These CEOs rarely give these kinds of interviews. I hit them hard. I get the data, and I wanna do it more. So if you wanna get more of this stuff, make sure you subscribe up here and then additionally, go check out one of my other CEO interviews right now.