How Leon CEO Bryan Smith grew to $5.3M revenue and 264 customers in 2024.

hey guys recording this here on what is it friday the 19th maybe you're seeing this on monday at the latest but want to let you know we are almost sold out for founder comp sorry founder 500 in austin texas here in about a week uh it's gonna be an amazing event 500 b2b sas founders i'm looking at the attendee list there's almost um there's almost 60 founders with more than six seven million bucks in arr it's an incredible group of group there's over uh there's over a hundred over 150 with more than a million uh more than a million revenue it's an incredible group you don't want to miss it uh grab your hotel grab your flight grab a ticket right now i'll put the link in the bio um in the description here on youtube and i think there's only about three tickets left okay about three tickets left i'd love to see you guys there don't be bashful grab your ticket now hey folks my guest today is brian smith he's an ex wellness professional pro sports performance coach turned repeat founder and startup advisor now building an employee performance and mental health platform which you can find at my leon dot co brian you ready to the top let's do it man all right how do you do this feels like such a personal thing how do you do this in software you know what it's it's funny so my background as as you said so i was a director of sports science for usa track and field right um and then what we did is we used data science to predict performance to predict injury and professional athletes right um if athletes and people sales people people work in tech we're all the same right we burn out we get fatigued all those other things and really what we need to be able to do is we need to look for the signals within the data to understand what's going on so what leon does is we integrate into like sales we primarily work with sales teams by the way we integrate with salesforce and hubspot and then we use sentiment analysis using um diagnostic surveys and whatnot combine that into an algorithm that gives us a snapshot of the teams at risk of burning out teams that are at risk of mental health issues but on the opposite end of that it actually tells us the teams that actually can be challenged or pushed harder all right so it tells us the teams that are very resilient so it ends up being sort of a almost like a mental model framework for a sales manager to say these teams need support these teams could be challenged to push harder now how do i build my business model around that so let's say one of our listeners here b2b sas founder they've got five people on their sales team they use hubspot they want to use leon to reduce turnover they sign up they give you access to their hubspot api what are you reading for give us an example of a signal that you're getting from hubspot's api to signify that one of the sales reps might be you know having a mental health issue or about to be burned out it's a combination so what we'll do is we'll look at your hubspot um activity data so that could be calls emails revenue generated meetings blocked opportunities generated whatever else um mix that with diagnostic surveys all right so where we're asking about sleep we're asking about well-being we're asking about psychological safety work relationship things along those lines you're asking the employee asking the employee correct how do you invest how do you incentivize the employee to take the time actually fill those surveys out i feel like people get those surveys they ignore them so so that's the interesting part about it right so you do surveys suck right everybody agrees that right and mps specifically are are very bad like you get no signal from it from an intense standpoint to understand what to actually do with it so one it's the way that we ask questions two is the way that we score questions right so the way someone scores has or answers a question has a half-life associated with it so that will help us understand exactly when to follow up with that person again but to your point we don't just take survey data and report some garbage metrics to a manager right what we also do is provide recommendations to both the manager and the employee to how to actually fix the things that are going wrong so we see that an employee's burning out we'll push a playbook to a manager to say these are the things you should be doing reduce hours whatever it is right go to a four-day work we talk more about empathy but also we have a marketplace where we've integrated into headspace and the com and equinox and the soul cycle and inside track and all these other things we'll tell the company the exact service to buy for that employee based off the data that we're seeing but on the opposite end of that we'll do the same thing with employees we'll say employees this is what you're struggling with here's what you should do to be able to fix this here are some content that you can engage with and here are some services that you can use through our marketplace to be able to sort of fix the issue that might be going on got it that's compelling okay so give me a sense of your business model right what's the average customer going to pay you per month or per year to use this technology yeah so um right now we have a couple different tiers um sort of a free plan all the way up to sort of like a managed care program um so primarily two revenue sources we have a sas model which is on average about 350 per manager per month so we're charging on a per manager basis but the marketplace also has a revenue share um revenue model attached to it oh what's going on there youtube good to see you guys now imagine this you love watching these interviews with sas founders but imagine if we took all of the valuation data out from over 2 2807 interviews i've done manually saves you a lot of time well we've done this we've built it into the beautiful interface inside of founder path check this out i'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas company you're going to get a different valuation a vc is going to pay a different valuation private equity firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when i hover over here right so the teal is what a vc would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on youtube all these datas are built from real-time valuation data points founders share with us on the show so traction 1.2 million seed round 3.7 raised they sold 22 of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of sas valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to go back to the youtube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderprep.com and hover over products click on get your evaluation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform i hope to see you there all right let's jump back into the interview sorry real quick so how do i want to focus money on sas here but the market how would the marketplace work you recommended your membership to equinox and you have a relationship with equinox you get a cut from equinox both sides of it so it's almost like a vendor model to a certain extent so a familiar vendor so you can actually buy purchase manage the whole entire benefit which will make a percentage on that on the on the on the employer employer side all right but also on the other side we'll make a percentage from equinox or headspace or else so we're making roughly about 20 of every dollar spent within the platform 10 on both it's split equally 10 on both sides okay so if you like so i'm making this up if you sign up a 100 a month user to headspace you'll get a 20 cut just as an example of that 10 from the employee or intent from headspace most of the use cases are are company-wide right so an hr manager will buy headspace for the whole entire organization which we'll get 20 total on oh i see which of these is if you if you add up total revenue last year on a percent basis what percent was marketplace revenue or sas revenue um sas was about seventy percent of the business and that was purely just because we didn't market it enough probably um but that's starting to switch over now especially as our introduction into the free plan um because it gets really interesting right because you know most of the time when we're talking about buying these benefit products no one has any clue what they're doing right what's what what works what doesn't work what's interesting is we can quantify the impact of these services so we can say of this percentage amount of people that engaged and signed up with headspace or wherever it is we saw this amount of improvement in mental health or burnout or performance or whatever else that makes a ton of sense okay very cool um you said three on the sat side 350 per manager per month but i just i don't know anything about your sp what the average like your sweet spot customer that signs up for you how many managers is on the team how many managers they're gonna pay for most of the time it's a it's a complete sales function um so we're talking about a vp of sales down to director of sales down to sales managers and anything in between right so if it's you know sdr leaders or whatever else um that's normally what the structure usually looks like so but what does that mean like i don't know if that means there's gonna be a thousand so there's other like five liters on average for the sales team size you're typically signing up yeah depending on the size of the company we're looking anywhere between seven to about 12 depending got it then you're you're dealing so 350 bucks per manager times seven managers what is that like 2500 bucks a month so you have an enterprise sales motion here i mean you're getting up there yeah and did you were you always that way or did you move up market no um it was always the the focus i mean it took some time to sort of us to get our our legs underneath of us a little bit uh but that was always the focus it just took some time to get there yeah well talk to me about time when did you launch yeah so we launched three products like pre actually anything roughly about two and a half years ago we had an existing product before that which was uh sort of a a gym membership sort of model sort of like gym pass class pass type model 2019 late 2019. exactly and covet killed that business obviously which accelerated this um so about two and a half years ago we launched pre-product on product signed up roughly about six um early access users um through all from product hunt wow yeah uh it was actually pretty i mean we hustled man and we went through like every sort of community play and you know we were very uh what's the word uh challenging um in the way that we opened up you know our tagline was like 85 percent of your employees hate their job um and a lot of people got mad about it and it was you know it was exciting for us and then you know there was a lull because like anything from a product standpoint everything got delayed um but we've been uh like fully launched right now roughly about about a year and a half year and a half interesting do you remember how many up votes you got i don't tell you the truth i mean i mean did you get were you like first of the day i'm just curious what position you have to be to get six thousand sign-ups from products on i imagine it's like the opposition it actually wasn't all that great because what we did is um we we took that that product launch and then went to like you know dave garhart's community and sort of like started talking to some of the marketing uh people there and then went to some of the sales communities and just started like literally pushing buttons be like your sales reps hate their jobs your employees hate their jobs and that's what drives a lot of sort of the engagement to figure out what's how we were doing um but it definitely wasn't all product hunt for sure yeah you had another product launch in in 2021 that's not the one you're talking about right that's not the one we're talking about i don't know if the one we actually launched is actually on there anymore because we had to replace the one that we did in 2021 but i think that was number four of the day or something like that yeah this one didn't do bad i mean it didn't do amazing i didn't do bad though either it did i would say fairly solid um very cool okay so product product on helped you there um that makes a lot of sense okay so that was your first sort of tranche coming in started de 28 2019 2020 into 2021 how many customers are now working with today how many logos um so about 1500 total users uh total clients right now ups right now um roughly about 750 of them are what we consider active users which primarily is is data beings answered and is there some sort of action being taken within the product right so if that is either content engaged or a playbook started or a marketplace product and you know invested in or something like that um with roughly i think we're at 264 paying clients currently right now that's great that's a health i mean that's a healthy little funnel i love that you know those numbers on top of your head um i mean so can we take that 264 paying customers times sort of the seven manager arpu we talked about earlier i mean i'll put you guys at like 600 600 grand a month right now in revenue uh no it's definitely not that it's a little all over the place because some of that is mixed in with some of our marketplace revenue some of it's missing which is red line deals and whatnot um so yeah well so is the does the again when i asked earlier was like the average team when they sign up how many managers and you said on the low side was seven is the low side actually more like two or three yeah i apologize so that's the teams that most of the time we're going after so when we get into like a whole entire sales function we're actually taking on about seven but we also have one z2z sort of sales manager so i see i see well okay so again if you look at your current look at your current customer not what you're going after in the future but your current customers you would say it's more like two-person like manager seat teams individual sales managers things along you know like that correct okay okay got it so like two seats times two your 260 more clients would be more like 180 000 bucks a month in revenue something like that that's closer to accurate yes correct okay and that's just on the sas side right yeah that's just something no that's a combination that's just on the sat side from there and then there's the marketplace revenue as well that's great well you and you said earlier that sas is about 70 so we can mark 180 000 bucks a month up by about 30 to get your total revenue like 210 a month something like that yep that's fantastic but you said what's surprising here most people say sas is growing faster you actually said your marketplace percentage revenue is growing faster than sas yeah you know and i think that's just because we sort of figured out the business model to a certain extent right um you know the and we started pushing free a lot more also because we did see that there was be there was dollars being spent within the that sort of benefit space and there was really there was there was really nothing sort of you know when really committing to that sort of market as a whole especially the way that we looked at it right so the buying and the selling and the quantifying of sort of those metrics um so we pushed free and then from there changed a little bit of the sort of plg function to make sure we're getting people to engage in some of those products and buy some of those products within the marketplace so on our end that's a much stickier uh revenue source and some of the sas model that we have yeah i know of course what about overall growth rate if you're doing 220 grand a month today in revenue do you remember where you were exactly a year ago uh yeah so roughly i think we grew by 116 percent okay so so you had about 100 a month last year now you've more than doubled sure yeah that's that's great um very cool uh talk to me a little bit more about the team how heavy engineering is this how many engineers uh 13 engineers currently right now across a team size of a total of how many yeah so from a sales and marketing standpoint it's just me and my co-founder who are still leading the sales marketing aspects of it um and then the rest of it is customer success and engineering so total team size is what yeah so we're at 26 people currently right now 26 26 and do you feel like you've sort of hired a head of growth or are you like oh my gosh everyone's wearing 20 hats we need to hire we're we're panicking completely right now uh you know and and truth be told it's you know i think it's it's it's a scary proposition to be able to hire a vp of sales or you know a director of sales or a vp of marketing whatever that is um you know and then truth be told too with like there's a lot of things within product that you know are still being handled manually on the back end that we're still trying to sort of work through um so i think once we have some of those figured out some of the plg motion then we'll start up uh start hiring some of those those bigger gaps have you bootstrapped all this to date or have you raised no we've raced right roughly about four and a half ninth oh i see i see when was the last race uh eight months ago uh okay so what was that that was this year or last year uh what is the 2022 so this year they closed in january something like that and was that your seed or series a or yeah it was i mean it was sort of like a combination of like a friends and family sort of seed round um you know essentially we have a relationship with a pe firm that spun off a vc sort of arm to be able to sort of fund us but it was very much a friendly sort of investor sort of friends and family type relationship it just had a uh sort of organizational structure behind it so the full four million you raised today was in that seed round yes i see okay why why raise the capital i mean why couldn't you i mean was there a path to keeping equity keeping control not having to set up a board yeah you know i think it was on that end it was it was a friendly investor um that we knew we could take in capital we yes we had to give up a board seat but it was also too we didn't really have to answer to our investors in any shape or form right i mean the biggest thing that you didn't mention though is equity i mean i understand it's a friend but you don't want to give up 20 of your company just because they're a friend yeah sure no and i agree with that um but it was still it was still friendly terms to a certain extent and truth be told and do we got scared right like we felt like we needed money to be able to sort of you know get us through where we're at and what our our roadmap looked like and you know we decided to do it i guess fair enough fair enough um most folks doing seed rounds you know closing in in january this year were selling call between 10 and 20 percent of the business reserve in that same range yes correct okay so that would have been like a valuation of what something like 20 million 20 22 million maybe a little under there i think it was about 17 or 18 actually post money yes okay very well it's not that's not terrible at all now is it panning out how you thought it would you had a thesis of where you'd invest the money you have six months now of history is it working oh no we burned through way too much money today how much is too much no i mean we still have a considerable on that left but we still i mean like anything neither one of us come from this world right um so we made a ton of mistakes as far as keeping staff on too long over investing in and certain things you know um and and i mean you live and learn you know so uh but yeah we made a shitload of mistakes not to tell you the truth fair enough i love the vulnerability very cool hey uh tell the story here let's wrap up with the famous five number one favorite business book uh favorite the great the greatest c the great ceo within i enjoyed that book actually number two is there a ceo you're currently following or studying um no i i don't think so no number three what's your favorite online tool for building leon um you know from a sales standpoint i love ample market actually ample market number four how many hours you sleep to get every night i have a five month old so like four oh wow okay is that your only only kid no we have two more 12 year old and a nine year old wow busy guy so okay so married married with three kids correct yeah wow and how old are you i am 40. 40 wow okay and last question something you wish you knew when you were 20 something i wish i knew when i was 20. um i guess that everything would be okay mm-hmm yeah i was a bad kid man so i was a bad kid you know did a lot of bad things as far as you know uh so yeah that everything was going to be okay just to sort of stay faithful and stuff you know guys myleon.com you're going to see more of this they plug into your hubspot api or salesforce api they'll look at certain signals along with employee surveys to understand where's burnout happening who is you know maybe you know approaching a mental health issue or things of that nature then they also help you find a solution remember it's a headspace membership for 10 bucks a month his revenue model is you pay him right per manager 350 bucks a month uh and then also if he helps you sign up for headspace to help solve some of these issues he makes a 10 cut on each side right so 100 sale he'll make 10 from you 10 from headspace currently doing about 220 000 bucks a month in revenue up from a hundred thousand dollars a month just a year ago seventy percent of that 220 grand a month is pure sas thrust marketplace they're scaling nicely here four million raised it around a 17 18 million post money recently 26 on their team 13 engineers he says they're breaking out the teams trying to find talent brian thanks for taking us to the top man appreciate it man thank you one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1pm 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