How KPI Sense CEO Wil Cordes grew KPI Sense to $3M revenue and 40 customers in 2023.

hello everyone my guest today is will cordes he has over a decade of experience helping sas and software business solve their strategic financial challenges during that time frame he's led operate advised or invested in over 100 sas and software companies in march 2019 he founded kpi sense to reinvent the concept of outsourced cfo and fpna work for sas and software companies will you ready to take to the top yeah let's do it so that was a mouthful i mean are you a fractional cfo basically uh kind of it's kind of an evolution right so uh i started doing this work back in 2015 and it's it's funny if you search sas outsource cfo or sas financial model my name or my old website typically is on the first page of google and and not to say that i'm the best or i know the most it's more uh just that there wasn't a lot of specialized services and for sas companies with deferred revenue with the different metrics uh and with a lot of kind of the unique uh financial statement and kind of other kind of data challenges that are posed it was a good opportunity so started kpi sense uh about 18 months ago to really help companies and blend automation and kind of product related focus with expertise in the space so just be clear you launched in 2019 not 2017 correct okay yeah launched in 2019. yep so we've been in business for about 18 months uh i've got a team of 13 now and uh we work with close to 50 companies so you know 50 customers correct that's right and almost all of those are our sas businesses anywhere from uh 500k of error up to 50 million of error what do they pay you per month for your services on average yeah so average acv uh it's about 30k annually um you know price point on average is about 2500 a month and uh again we have we have great great net retention people stick around what's great uh 100 plus yeah uh right on average i mean again we don't have a ton of data we've only been in business for a year and a half so you know knock on wood uh hopefully that uh that sticks around there but yeah i mean i think for us the reason being the traditional outsource finance space is broken uh you're you're talking about consultants who are old school a lot of them with mixed uh you know financial experience within sas and there's perverse incentives there's no benefit for them to go and build automation and structure that's worked they're taking off their plated future periods uh so our model is more long-term focused we do minimum six to 12-month deals and we try to work at a much more reasonable price point an average outsourced cfo or consultant will charge five to 15k a month for this type of work we're half the cost and even if you go and hire a full-time cfo or vp of finance we scale with your business so we that's happened in five of our engagements we've stayed on every time because we become more of a fractional fp a financial analysis resource and we're a third or fourth of the cost of a full-time finance head to begin to support your business is there software behind this or is it consulting yes it's a great question so it started off as more consulting more of a managed service you know retainer format we started building our platform back in april uh and now we've got an engineering team of four and are actually in kind of a fundraising process ourselves uh kind of reviewing term sheets and bootstrap today uh we raised 225 cad so for for all intents and purposes yes we're bootstrapped and i've got all that all that money more in the bank we've got about 350k in cash so we've been uh really cash efficient as a business thankfully how much are you hoping to raise right now probably a million a million and a half uh that's kind of the target again we're we're still we've been going through this a while right and you probably know this uh better than most people i think coming in as a service business business and transitioning to sas it's a challenging story for kind of investors to grasp especially pure play sas investors so but we're using all the data that we've gathered to really as a proof of concept to say people are willing to pay this lunch per month they're looking for kind of that consistent financial support and not just somebody that whip up a model that they can shoot off to an investor to raise some capital they want that consistent trusted resource with a little bit of that tech enabled automation to drive further efficiency so with the platform we're really looking to kind of enable and bring together the finance stack for a typical sas company so transactional data financial statement data and ops data bring it into one universe and cleanse it and then build interesting use cases on top of that so whether they're analytics measuring your metrics or dashboard looking at sales efficiency helping to raise venture debt for example those are all use cases that we can help automate and streamline moving forward and we're already starting to do that today what valuation are you targeting on the 1.5 million you're raising uh we're flexible right i i think i'm not looking to to box myself in there necessarily but uh you know again you know we're seeing stuff in the mid to high you know single digit millions you know we did talk to some growth equity parties uh you know for something a little bit higher than that but um a lot of capital to potentially raise and um you know a little bit more control than i think i'm willing to go up at this point so still in flux but i'm a little less focused on dilution and more focused on finding the right partner and making sure that we're well situated to kind of drive things forward from here 50 customers 30 000 hc on average so i mean so you guys have gone from nothing to a 1.5 million dollar run rate in the past 18 months yeah so some of those are professional services hourly customers we're a little bit below that uh we're more in kind of the 1.2 range okay uh but yeah not too far off so about about you know closer to 40 customers they're on the recurring side uh and then again five to you know five to ten and some change on more hourly professional services clients that we're working with but our view is with the managed services that the 40 that we're going to be able to get them into pure sas in the next six to 12 months or very close to it yep how is this different from sas optics or i mean there's dozens of these sorts of forms out there yeah it's a really good question um sas optics is is a great business i know those guys well and honestly they were inspiration for this business model dave ryan uh one of the co-founders of sas optics who i have a ton of respect for called him one day walking back back from from the office and my full-time gig back i think three years ago at this point and said hey what about a point of service offering for sas optics for us to come and work with your customers use sas optics data and provide more of an analytics as a service to your customers you know i think cess object is a great platform amazing revenue recognition and good kind of reporting fundamentals but there's an element of that that's last mile where they you need a finance expert or a kpi metrics guru to go and extract value out of the data that they have uh love the idea we talked for the team i think they decided at the time it wasn't incremental enough for them to really pursue aggressively and i was just idea stage at that point on a napkin um but it kind of got my head churning and kind of led to the the foundation of the business but we're not a rev-rec tool we're not a pure reporting tool i would think about us as an amoeba we're taking no sas optics is going to help you with rev rec and subscription revenue data where you're still going to have this delineation with your quickbooks instance your financial statement data and then all of your analytics data we're bringing all that together to help you be kind of a source of truth for historical financial information and forward-looking predictive information so getting your financial model your scenario analysis preparing for example for 2021 planning and budgeting and really nailing down your metrics and understanding that but you don't have to be the guru what will be that expertise for you and give you the the materials and the feedback and kind of the the decision-making uh criteria that are going to help you execute and be a better business at the end of the day i mean do they probably hate that you're launching this and have grown so fast so quickly like why didn't they just hire you and have you lead a yeah no well that's a good question uh you know honestly i think uh you know i talked to dave about that a little bit i think i think there was definitely interest of you know potentially working together um but i wanted to kind of go out and do my own thing i don't think it's really competitive though to what they're doing it's much more of a services layer i mean think about early early days of like salesforce right they they created this robust services market on their platform whether through applications through professional services from implementation from architecture it's the same concept with the subscription economy there's a way to take that financial and operational data and build really interesting use cases that are monetizable that drive value to customers but it all is reliant on good financial data and you know this with founder path right getting good data from from companies can be really challenging there's all sorts of different shapes and sizes so for us we're able to unlock additional value from these different kind...