How KeyedIn CEO Lauri Klaus grew KeyedIn to $35M revenue and 350 customers in 2024.

hello everyone my guest today is lori klaus with extensive leadership experience she's the ceo and co-founder of kedan a minneapolis-based company that helps organizations simplify business processes processes improve performance and drive results through its innovative sas based business solution before she founded keaton she held various senior management positions at epicore most recently as executive vice president worldwide sales and services laura you ready to take us to the top absolutely let's go for it all right the project management space is hot we can't talk about it without talking about monday's most recent 150 million around a 2.9 or 1.9 billion dollar valuation there seems to be so many 100 million dollar winners though in this space you're playing in it how are you differentiating well first of all we differentiate by a lot of new innovations as well as being native cloud and um you know founded seven years ago so we founded started with just ppm and have noticed project portfolio management so we focus on ppm for project management offices as well as professional services automation primarily for embedded services organizations so if you look at any software company they would have a services organization and that's where we fit very well okay interesting these are like for a sas company a lot of them have service organizations that do the onboarding for example or you would serve that team correct yeah okay and can you maybe i know it's hard without actually visually showing the ui but what about your product makes you the best fit for those kind of onboarding teams well we're very flexible we're we we've got the right balance between best practices as well as being flexible so that people can build their own dashboards and really find the information they need to make decisions on a timely basis before it's too late you know these these companies have millions and millions of dollars of projects that they're working on and resource management organizational management um being able to do that makes companies much more efficient and ultimately saving millions of dollars a year and at the end of the day you know everyone wants successful projects they want them done on time and within budget and it's really tough to do um i ran a software company we had three thousand employees which one apple core uh i had 1500 employees we had 300 projects going on on a monthly basis and uh it was very easy to sweep things under the carpet and ignore you know bad disciplines so it's it's really important and it's growing i would agree with you so give me a general sense here i'm sure you have hundreds of different customer cohorts but for the sake of time what would you say your sweet spot is what's the average business going to pay you per year to use your technology yeah so we've really got two two unique groups one is large organizations enterprise like walgreens boots spec savers large companies where they've got it organizations and they have project management offices and are running hundreds and hundreds of projects so that's going to be somewhere around you know three to four hundred thousand dollars a year in uh annual contract value on the other side the embedded services organization it's closer to a hundred thousand a year uh but all in all it's about 350 customers that we have growing from you know when we founded the company we had about uh about 40 that were acquired so sorry what do you mean since you founded 40 were required we acquired a company seven years ago and they had about 40 sas customers and since then we've grown to about 350. oh great okay so i want to capture more of your founding story you know there's a lot of people that say it's actually smarter to get started by actually acquiring something you avoid the zero to one and focus on the one to ten uh so let me go back to that in a second but first i'm gonna repeat back to make sure i got this right so you have two cohorts one about a hundred thousand dollar acvs then a more enterprise version at 300 or 400 thousand dollar acvs but everyone's north of 100 grand a year pretty much yes that's great okay very good and then uh so okay so take me back to the founding story so you're at epicore do you when did you decide it's it's time to pull the trigger and leave that safety net and go all in on your own thing well i was at epoch for 22 years so i grew up there we acquired 16 companies brought them together so have a lot of experience bringing companies and cultures together it was all in the on-premise world and we knew that the next evolution was cloud computing and uh we sold epicore for just under a billion dollars and used some of those funds to found keyed in to focus a hundred percent on business to business cloud computing um definitely know a lot of the pain points um and lots of great experiences but we were able to start from scratch to build environments to avoid you know a lot of those pain points like infrastructure i mean that's that's one of the biggest pain points that uh any on-premise will happen so so lori which company did you buy back seven years ago oh my gosh we bought 16 so clientele uh uh uh sorry the one that you started keaton as the one that you bought yeah whoa you're taking me way back yeah um no we we acquired a company called atlantic global and they're publicly traded we're a publicly traded company uh we also acquired a platform as a service so we have our own uh platform uh independent of any you know like a a sales force one or anything like that and then we also acquired we have we have a smaller group for custom manufacturers um and that's a third that's a third market that we go after but but we're independent in terms of platform we're aligned with microsoft uh and uh microsoft azure as well what was the beachhead though of the code base it was the atlantic global acquisition yes okay so that was a publicly traded sas company at the time of their last reporting on the public markets what was their revenue it was about eight hundred thousand why were they public would be so small they were they went up and down so 99 and yeah that was their their little low point which is why they wanted to sell um they had just re-architected their product a couple years prior so it was a real it was a technology buy you know technology because it was native cloud computing for products so what'd you pay for it all in to get going uh i'd rather not disclose that but what i will say is we've we've uh funded the company with uh funds from the sale of epicore as well as friends and family and then we did just have our first uh first round of institutional investors about a year ago and that was uh that was a 15 million dollar rate how much total raised and keyed in today uh rather not disclosed but it's significant okay yeah by the way most of that is public right so public records show you raise about 42 million dollars total is that accurate it's it's close okay so 42 million and then again you took a public company private so i and that is also uh you know i have to obviously reveal that right so i'm gonna let you do it or i can pull it from the research i'm just curious to general range what you spent to take that private uh about five million okay yeah so that that's what was reported as well so um help yeah which can be big um so five million kind of all in would you cons so if i asked you like total cash you guys had to sync all in before you were able to add your own customers on top of the 30 or 40 that they already had you think it's about five six million with legal fees and then it was all yours right okay so since then you've obviously scaled now did you keep up the 350 customers today do you still have all 40 or 50 of those ones you acquired back in 2012 i would say we've got about 80 percent there was some cleanup to do um and that was you know there were there were some customers who wanted to be on the in the on-premise situation and we were focused on cloud so we worked with them to transition out so i would say about 80 yep this kind of term by the way is natural right as you're scaling a company especially as you're pivoting what you're like cohorts going to be so when you look at your past 12 months obviously churn is critical in a sas company you have a lot of experience what is your turn today and what are you doing to make sure you continue to load that over time lower that over time we uh we're in an excellent situation right now our net retention is 108 um so our customers continue to invest more we'll peel that onion back though for me so 108 is made up from churn plus expansion which gives you the 108. what are those two metrics it's about 50 50. 50 new 50 add-ons well sorry net revenue retention has nothing to do with new customers you add it's a measure of the core that signed up a year ago how much of it churned versus how much you expanded that same cohorts revenue that was my question so of the 108 percent net retention what was churning what was expansion on the court from a year ago the turn is about um ten percent okay so expansion's about 18 then exactly okay pretty good and and so help me understand the expansion model when this goes into your product a little bit more what kind of things are you up selling against is it number of seats or is there a value-based upsell you're upselling against a lot of it is we we start in one division and then work gets out and we go into another division so they're not it's not it's typically large expansions um...