Metric Revenue & Funding (2019)

hello everyone my guest today is andre boskoff he's a full stack ceo at metric.ai a financial management software that helps consulting companies and agencies run their businesses in a data centric way all right andre you ready to take it to the top let's do it so first off is this a pure place sas kind of business model or something else no that's correct as if your enterprise house okay and give us a sense of what you guys do so we're building a financial management solution for consulting companies um my experience previously i was running the agency myself i grew it from zero to 50 employees i even later sold it but throughout doing that um it was pretty challenging experience is a fairly low margin business i've actually nearly bankrupted it myself like i was one of those scary moments where you cannot pay this salary for your like 30 employees back in time and the reason for that was we're actually not properly managing and measuring that business and and the reason for that we're just we're not able to find a proper tool long story short we successfully recovered we grew the business we sold it was all great but hold on set back there andre for a second so the agency grew to 35 employees what was in its best year how much revenue did it do um so it was probably around two million dollars so that was the offshore agency so that was pretty good numbers for that okay uh and then what'd you sell it for uh we cannot disclose that that's under on date what year did you sell it was in 2015. oh come on that was like four years ago okay give me a i mean give me a general range give me a general range um so the prof services business are fairly easily evaluated is the multiplier on top of the revenues the range usually is between two to three acts of multiplayer unless have something specific so usually you should be looking at the range between 1.5 to 3 x's depends on other variables okay so you sold for somewhere between 1.5 and 6 million yep okay very cool now what did you do with that money did you use it all to put into this ass company um pretty much close to that like not all of them trying to be fairly conservative to make sure i have enough runaway but close to that okay so the current company today when did you write the first line of code um so i think it was may 2017. and how much total money you know time effort energy did you put into the platform before you had your first dollar of revenue uh it's a good question uh probably around six months uh work that we spend and not that much money because primarily by that time just myself and one more engineer okay so basically two engineers salary for six months right so call it something like 60 grand 70 grand something like that and did you bootstrap the company or have you raised capital to date so initially bootstrap but then we've raised additional angel round um from essentially friends and family who have worked before um and that's how we continue to operate right now so we don't have any vc funding yet that's great so how much capital to date in the company um so it's 400k of the investment at a pet total okay and do you think you'll go down kind of the vc path from here or you'll focus on being profitable buying out early investors and building a more sustainable company it's one of the questions that i'm still debating we're pretty much break even by this point uh and it's really i mean we're in a long-term business ourselves like we have very long sales cycles so sometimes it just makes sense to grow organically um essentially it's not decided yet i need to grow a bit further to just understand where i want to go with that business well what have you scaled to i mean how many customers are you working with now today uh we have more than 10 but also we don't disclose the exact number okay that's fine but my point is more than 10 it means it's a very high touch kind of enterprise sales model correct okay and what are they so when someone pays you generally speaking what's kind of the average annual contract and what are they why would they pay more like what do you price against so acv would be between 25 and 100k okay um and its pricing is pretty similar prices like standard pricing based on the seats per month uh sales per month with a certain price usually we go with annual subscriptions okay but anything other than seats do you have a usage-based upsell at all we don't have usage based right now we're trying to be fairly simple with the model just because we're focused on actually building out the product and trying to experiment with the pricing strategies for like five ten customers doesn't really make sense at this stage for us what's your team size today how many people are we just five okay five of you guys and i mean i can take a minimum right so ten customers at a twenty five thousand dollar ac that puts you north of 20 grand a month right now in revenue is that accurate uh somewhere could be in the ballpark okay well uh again fix those numbers if they're wrong they're your numbers right 10 customers you said you have more than 10 and you said higher than 25 000 acvs that would mean you were definitely north of 20 grand a month in revenue is that not accurate uh it's pretty accurate okay and then if you go back a year from today where were you do you remember um a year back yeah like so if you go back to uh you know july of 2018 what were you doing that month do you remember yeah i was probably around five grand or so and has most the expansion revenue come from selling more to the same customers or adding new customers all together that's obviously adding new customers and targeting the larger customers that we can find yeah where so where are you finding customers today what channel it's an outbound sales model pretty much um so it's just me right now doing these sales and just doing outbound outreach who are you targeting what's the job title um it's cfo ceo co essentially like c level executives and we're targeting mid to large size companies between 50 and 500 employees okay and any specific geographical range or sector focus um so the professional services company especially digital agencies or digital consultants so that that's that's the niche that we're focusing in okay so ce you know cfos ceos at digital agencies with between 50 and 500 employees correct okay and so your sales team so you mentioned there's five of you guys how many are doing outbound sales just myself okay so you're really owning all of this um i mean you it sounded like you were a developer really why haven't you hired a sales person um so one of the good is rice is like if you can like learn how to do sales and you can know how to do development you're essentially gold because you can do both of these things that's exactly what i'm trying to do it's like i'm fully believer that you have to know how to do sales before you scale up your company so this is a challenge what i'm trying to do i'm actually trying to grow like up to like a millionaire or by just doing sales myself just to fully understand the entire process and once you're ready obviously go on and scale the sales team yeah that's in line with matt billows from yesware who says i did all the sales up to a million ar before i hired my first sales person yeah so that's exactly what we're following that's great churn's critical in a sas company what's your turn today we don't have any churn yet on this so nobody has either canceled completely or even paid you less month over month uh that's correct we mostly have the annual subscriptions we had our first annual renewal four months ago um three months ago so yeah pretty much it's actually negative churn because uh some of the customers are paying more because they purchased more seats oh return like five percent year-over-year expansion because of seats or more usually even more because the typical consulting company would grow like between 10 to 25 percent so i believe it's probably around 15 15 that put net revenue retention around 115. yep yeah okay interesting and then what are you willing to spend fully weighted cac to get a new 25 000 your customer um so i mean we don't measure this right now because it's just primarily just me doing outreach but realistically we should be able to spend between like five to ten thousand dollars a cac per customer because even probably much more than that because usually the ltv value on those deals are very large essentially replacing the software is being used by entire team in the consultancy and that means if you did all things right they're going to stick with you for five or maybe even 10 years it's very hard to replace this particular type of software um so we're very much invest in our customers so cac might be even much larger than that value yeah i know that makes a lot of sense um where so so talking about like moving forward in terms of funding right you could go two ways right you could raise some capital to buy out early investors maybe raise debt to buy out early investors so you own 100 of the company or you and your founders or you could go down the vc route and say you know we're going to go raise our seat et cetera which way do you think you're going to end up going i think it's more likely to raise later on i'm just probably not sure exact timeline we are in the business world with a lot of companies that raise quite quite a lot of money like pretty large rounds um so the names would be clarizen or like the oracle's open air products or maven link or any of the other large enterprise players um so far we're able to kind of compete with them by just being more agile since we're much smaller team uh but once you get to a certain scale you would have to invest heavily into the marketing and sales and once like the the numbers that they drive due to their rounds like on the marketing side you just have to like get to the same level and most likely have to raise very good all right let's wrap up here andre with the famous five number one what's your favorite business book um so it would be a flow it's probably not even the business book i think it's flow the optimal psychology of optimal experience it's actually so running the business is is managing employees and essentially the the successful employee is happy employee and this book is just about how like why people are happy and what do you need to do about that number two is there a ceo you're following or studying right now i don't think i have like followed in particular uh ceo but i have like satya and antelope from microsoft i'm a big fan of what like how the microsoft turned around in the last 10 years it's it just shows that under the right leadership you can do even things like that like to turn great company number three what's your favorite online tool for building your company um some developer uh still coding so probably let's say github and number three how many hours are sleeping every night uh i think my aura ring says eight and a half hours so eight eight or nine good and then situation married single kids uh i'm married any kids but no kids and how are you i'm 32. last question what do you wish your 20 year old self knew um so don't underestimate the compound effect so in a sense that some things take time to build um and maybe their progress in the beginning is very small but there is a component effect and getting better and better so probably focus on a certain industry and just become like professional very good professional in that particular industry metric.ai over 10 customers paying north to 2000 bucks a month so twenty thousand dollars a month in revenue up from five thousand dollars a month just a year ago spent 60 grand to build the mvp started back in 2017 400 000 raised to date across their team of five as they looked out financial services companies run their businesses more effectively andre thank you for taking us to the top thank you