How Kimbleapps CEO Sean Hoban grew to $11M revenue and 220 customers in 2019.

hello everyone my guest today is sean hoban he has over 25 years experience in the it consultancy space working for oracle and logica cmg as well as startup consultancies sean along with mark robinson and david scott co-founded kimball in 2010 and now he has the role of kimball ceo sean are you ready to take us to the top i am indeed all right so what is kimblin how do you guys make money so kimball's a professional service automation software solution focused on organization where people are their main asset so they're typically delivering projects or managed services and they're charging for that and they're either pure play consulting type firms or they're services firms embedded in usually a high-tech type organization okay but what kind of revenue stream are you looking at are you a pure play sas company we are a pure play sas so it's a recurring revenue model uh on a per user basis is our model okay per user basis great and give me a general sense the average customer is going to pay you about what per month to use the platform so on average our average customer's about 250 users and they're spending about fifty thousand dollars plus a year on that okay so 2500 users can you can you name it so 250 users on average got it on our ranging from people with 20 users to upwards of 6 000 users so our largest customer's got over 6 000 users on the platform and a user is a team member inside of that agency yeah it could be it could be a consultant that's just effectively doing time and expense it could be a project manager it could be somebody in finance that's raising invoices it could be a resourcing manager or it could be somebody in the sales side of the business so what is someone paying you though that has 6 000 users look like is that like a massive agency uh a massive consulting firm yeah an i.t services consulting firm so think of some of the big ones like top consulting uh you know wipro or you know deloitte's accenture those sort of organizations they're consulting firms where they've got a lot of people yep yep okay that makes good sense and then put all this on a timeline for me when you launch the company we launched a company in november 2010 uh so we're just over eight years old now [Music] and we've got nearly 60 000 users on the on the platform now okay and what does that mean in terms of total logos paying you so that is about 220 logos 220. okay that's great now can i take the 220 times that 50 000 acv you guys are doing what about i'm almost you're pushing a million a month almost yeah okay or getting close to it yeah yeah very good what do you think you'll pass it in the next month or two uh yeah in terms of dollars yeah yeah absolutely yeah so this year of total revenue so that includes a little bit of services we'll do i'm just converting it into dollars now about 25 million dollars plus 25 to 30 million plus this year revenues and what percent of that will be pure play sas uh 75 to 80 sas pure says that's great and now take me back a year so and call it march of 2018 how much were you doing per month do you remember uh so we did in finishing 2017 we were doing in dollar terms about 12 million dollars so we're growing at about 50 we'll grow about 50 this year so we're growing at about that sort of 40 to 50 year on year okay so you said 2017 you did 15 million or 2018. so 2017 we did uh i'm just converting into dollars about 12 to 15 million dollars yeah and last year then another 40 on top of that and again we'll do another 40 this year got it so you did about 18 in 2018 and then you live north of 25 this year correct that's great that's healthy growth where's most that growth come from adding new logos or upselling historical ones uh mainly adding new logos but we get a good expansion from our existing customers so if you think about our customers if they're growing they're buying more licenses from us so the consulting firms or the it services or the the technology firms if they're growing they're needing more users yeah so we get about 10 expansion and then the rest is new logo okay so you got 10 expansion on your historical cohorts what's gross uh revenue churn on that same cohort uh about six percent okay net revenue 104 correct that's great um and those are both the annual numbers right correct that's wonderful okay let's take you back to like day one how did you get the first 10 customers so we're on the salesforce platform so we're an isv on the salesforce platform so we started developing functionality before we had a fully launched product but we'd be out selling some of the features that we developed and taking people on a journey and a dream our old background was we ran a consulting consulting firm so we knew the problems that they were trying to solve so we were painting a vision of do you want something that can solve those problems show them a bit of it and then we got a product uh first mvp product out just after six months and had paying customers pretty much ready to go when the when the software was securely checked by salesforce qualify the agency for me so so like how many customers had you had and what was like total revenue in your best year uh you mean you mean new new customers no no i'm just curious you use the agency to get the idea to then subsidize building the software prototype so i'm curious how large like what did how large was the agency before you moved away from it they didn't subsidize it we did angel funding that was that was there but we were going out selling to people that we thought ultimately would buy it before we got the product ready to launch okay so just just to be clear in 2010 what what were you doing before this if it's not an agency what were you doing oh yeah running a consulting firm running a conspiracy okay until 2010 yeah okay so consulting firm agency same thing but the point is a bunch of those customers and from the consulting firm became customers on the sas product completely different from the customer from who i used to work for though there were people that either people we competed with or people that were out in the marketplace but we were networking around our old industry saying we know the sort of problems you're going to have do you need a product like this and we'd be selling to them some people we knew because we just knew people in the industry but we'd be selling them the solution we knew that would solve their problem um but they they didn't fund the product the product at all in any way that was done with angel investment from day one how much have you raised today uh so uh we did a round back in uh last year march last year for private equity that's lkkr but before that we did 4.2 million sterling so about about six just under six million dollars and then last year we did uh about ten uh nine million pounds so that's about 12 million growth investment from accel kkr okay so 18 million total in the company did kkr buy more than 50 of the company oh they're a minority okay that's rare usually they're doing 60 70 80 kind of deals so it was really more like a growth equity round you know they bought like 10 20 30 percent right interesting um why does this business need capital uh we are investing in sales and marketing ahead of the revenues coming in and the cash coming in so you we we can get to a cash neutral position fairly quickly but it's a rule of 40. i'm sure you're familiar with the rule of 40 in sas you know how hard you want to grow you need cash to accelerate that growth so if you want to invest in sales and marketing ahead of getting the sales that's when you need the cash yeah and just just everyone knows too so rule of 40 is essentially you add your growth rate plus your ebitda margin uh and and you can and i recommend you do the most conservative ebitda margin so include all the expenses don't don't keep anything out so are you operating around that right now sean you're north of r40 yeah we're around 40 this year we did we dipped a bit last year because we invested we invested heavily the year before that we're running at about 42. okay that's pretty healthy now i imagine none of that is coming from the ebitda contribution it's all coming from growth correct yeah yeah correct yeah because you've raised so much right so so how aggressive are you being with burn right now are you burning like 500 grand a month 100 grand a month where are you we're really rationally back on the burn we invested last year heavily but now the burn's slowing the burn slowing down so we we think by the end of this year we'll be cash neutral okay on a monthly basis what are you at now just how in the red we're comfortable okay give me give me i understand don't you don't want to give an exact number what like what's the range is like 100 a month burn fair uh yeah yeah that's bad in that range okay so the reason i'm asking is you think over the next six to 12 months you will be able to more than cover that by driving growth to get to neutral yeah absolutely yeah interesting and that's that's a factor of scale so purely as long as you're getting you're not churning your renewals are coming in that's it's giving you a bigger and bigger base of cash coming in and so your sales and marketing becomes less of a drain on that cash that's coming in as you grow because that that the growth is just making your incremental base bigger yep yep yep very good um all right and then talk to me about team size how many people today 110 people where's our own base uh so headquarters in london where we've got about uh 55 or so people here then we've got uh five officers in the u.s so boston which is our biggest office uh then we've got park city san francisco atlanta and chicago sorry you said total was how many hundred what 110 people 110 okay got it that's great now talk to me about aggressiveness in terms of adding new customers so to get a new 50 000 acv account how aggressive are you willing to be on on cac uh so i mean our contracts that we're signing are typically a three year deal so uh we're not looking at necessarily a hard 12 month payback and measuring our cack on that we can accept sort of going out as far as an 18 month payback from a cat perspective because typically we're signing two or three year deals on average we're signing a 27 month term on our contract so that buys us more time in terms of a cap payback and as you move more and more into enterprise you'd expect the the payback period and your character to be slightly higher so sean just to be clear 18 month payback would be about 75 thousand dollar cac on a 50 000 per year a three-year acv kind of account yeah yeah interesting where's the 75 grand going is it mostly your inside sales team or what yeah inside sales and marketing yeah we do have a little bit of a channel strategy but not much it's predominantly you know marketing and then inside sales and that that covers business development solution engineering and account and account executives where are you spending in terms of paid marketing where are you spending money today uh so we do a bit of ppc uh spend on that uh event stuff uh some big events like the tsia technology service industry association a lot of the salesforce events so they run their um they're obviously dreamforce in san francisco but then other they call them base camps this year or world tour so spend quite a lot on that um and other industry and other industry campaign events and things like that yeah very good all right um you raised that last round you said it was in march of last year yep so right now you're either raising uh or you're selling to somebody which one is it neither we're growing well no you can do you can grow and still be raising or selling to somebody uh but seriously are you any acquisition talks right now uh no no i mean we obviously with accel kkr they they're obviously in the marketing things and and they they sort of put things under our nose that may be attractive but i think for us at the moment it's about getting the the the machine of the scaling machine really working uh efficiently and and driving that hard you know so the organic the opportunity for organic growth is pretty big for us at the moment and we don't see that necessarily slowing down so that's our focus rather than going and acquiring yeah all right makes good sense very good let's wrap up here with the famous five number one what's your favorite business book uh ben horowitz the hardest thing about the hard hardest thing of hard things the hard thing about hard things yeah you got it all right number two is there a ceo you're following or studying right now well we've just taken on stephen kelly as a non-exec director at kimball and stephen used to be the ceo of sage and microfocus and accordion uh so i'm working closely with him which is fantastic so i'm following him and he's following me at the same time he's uh he's a great mentor that's funny all right number number three what's your favorite online tool for building the company oh building the company um well obviously i'm not in development if i was in development i'll probably say the salesforce platform you know because that's that's been critical to us getting a product to market very quickly number four how many hours of sleep to get every night uh five to six and what's your situation married single kiddos married three kids three girls busy man and how old are you seventeen how old am i yeah i was gonna say you look good but not 17 good all right 50 51 last question sean what do you wish your 20 year old self well so i think uh people often appear smarter than they actually are so i think if i was 20 i'd tell myself that and i probably have a bit more courage in my convictions actually guys be more confident people tend to appear smarter than they are again launched his company kimbo back in 2010 after running a consultancy now today 220 customers using them paying 50 000 acvs on average doing north of a million dollars per month today growing 40 year over year they raised 18 million bucks most recently 12 million from k or 16 million from kkr where they sold a call at 10 to 30 of the company back then again lining people up signing them up using things like paid events things like that payback period is about 18 months so spending 75 grand and get a new customer 104 net revenue retention team of 110 in london and the us sean thank you for taking us to the top thanks nathan good to speak to you