Growth Era Revenue (2023)

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 andrew jacoby he's an entrepreneur focused on tech enabled prioritized services designed to help companies grow sales he co-founded his current company next sales in 2018 and after hiring a ceo currently serves as the chief innovation officer andrew you ready to take us to the top i'm ready nathan let's do it all right first give me in your head what what um what does a founder have to go through or think to go you know what i don't want me to see you anymore let me replace myself when you suck really um actually what it was was that um i'm i'm 49 years old and as you get older you gain a little bit of humility and you start to realize you can't do everything when i was younger i thought i could do everything and i could and as i got older i realized i'm good at some things i'm more of a creative zero to one kind of person and once i got the thing to a certain level that it went from ideas to hey man spreadsheets hr finance i had to tap out and bring somebody else in who can operate at that level better than i could that's interesting and and what level was that like what was it a revenue figure you passed yeah right it was it was a good question it's a good question we're we're not a we're a we're a tech enabled service so we obviously use a lot of tech as does everybody but we're a human-based business i mean we rent out human labor essentially i mean obviously there's ip parts of it as well and i t as well but ultimately it's people so when you're scaling with people it's not as easy as saying hey nathan you want to buy a thousand seats here's a thousand logins go get them yeah so what margin do you like to make by the way i obviously don't like the people mod i like sass but if you can do the people you can do the people model efficiently it's a whole different story so like what margin do you like to make per hour of human time that's on your team right that's it we don't do it we don't think of it that way but to answer your first question our year one so we did in 20 uh our first year was 2019 we did about 129 000. year two we did about 450 and it started to get a little bit raggedy around the edges around that half a million mark year three we we did about a 1.2 million and that was when i tapped out at the sort of around that level so around a little bit over a little bit north of a million bucks um and luckily we had an executive coach at that time and he was a successful entrepreneur in his own right and had built and sold multiple companies but was doing coaching and consulting on the side he was getting an itchy trigger finger to get back in the game because consulting you're not actually in the cockpit and he was looking for an opportunity and luckily enough we uh he joined and finished that story so 1.2 million 2021 what do you think you'll do this year that's a good question i don't know uh this year the first thing that he did was hey guys we got to like put on the brakes because we were basically like i'm a sales and marketing guy by background and so all i i'm a hammer and everything is a nail more top of funnel more leads more meetings let's print meetings close business print meetings close business and that's great it works to grow the company but you know it operationally can get messy that way so he just said look guys this year 2022 we've got to slow things down we've got to clean up the churn problem 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 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 to 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 gonna go back to the youtube video here in a second but if you wanna check this tool out if you wanna 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 founderpath.com and hover over products click on get your valuation 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 what's the problem well no right now we have we don't we've he's been in place for six months and we have no more churn problem we don't we think of it a different way nathan we think about his net revenue retention so that's how we look at the portfolio uh the health of the portfolio but tell me how bad it was i mean i liked that message it was that was right it was bad i mean it wasn't it let's put it this way it's bad in the first six months of our kind of business because you're stroking a check to me for for a while before you're getting an roi and people freak out nobody likes to stroke checks and nobody likes to do that they want to like get roi immediately everybody wants to put we live in a push button world and what we're doing is the chat well for us it's 3800 a month per thousand contacts works that we consider a seat of sdr service so essentially what was happening was that you know we were people were coming in in the first six months there's a high churn rate because they'll freak out and it's hard to keep them calm once they hit the six month mark once you hit the nine month mark once you start seeing a return those meetings turning into pipeline that pipeline turning into business then all of a sudden you're you're you're fine the churn goes away essentially i mean it goes almost goes to nothing and you start going to expansion right now we have net positive so we're you know we're probably 105 percent we'd like to improve that but you know our business expands now and that's all due to the operational um so i would say just to give you a sense of revenue-wise because i know you're going to ask me because i know your show um just you listen yeah right i'm a big fan awesome dude yeah this month we'll probably do between 135 to 140 k mrr that's great and last year i know you're going to ask me what we did last year probably around 100. so that's good so it's it's still growing but as you saw in the first three years we were growing hundreds of percent and i love it when i have someone i love when i have someone who comes on you can always probably do this interview yourself uh because you reuse your face you got my favorite book i got everything man i'm good that's awesome people always go you're a good person to ask this people always go nathan i freaking love your show but like why would i ever come on and i and i what i tell them is well first off you know we just passed 20 million downloads so that your episode will get twenty thousand download there's a lot of investors that list and there's a lot of potential customers that listen you'll see an influx but for you not knowing all of that like why agree to come on well because i mean number one i i respect what you're doing i think it's great and number two you're you're a gatekeeper to an audience that we want we we've we've worked on we work with b2b sas companies and the consulting cloud around them yeah and that's who we're trying to reach so tell me more about that we skipped we skipped over that right so that what is the product what what does that what do people pay next sales for 800 bucks a month to do we staff up we we built on we built a sales development as a service engine that we bolt onto companies so essentially if you're saying yourself hey man i want to go hire a bunch of sdrs or i'm going to go hire on sdr to build top of funnel for me we say go ahead go do that if you want to do it when you've gotten beaten up punched in the face 1500 times trying to do that then you come to us and we say okay we have the intellectual property it's all we've done we've built the hr engine it's a tough job to hire for as you know nathan it's high churn you're dealing with young kids and it's not it's a hard emotionally difficult job every single day i started in the business that's how i know what it's like actually how many are on youtube today actually believe it or not our ceo i was his sdr in 2008. so it's amazing full circle sorry bryce wait so how so how many like trained sdrs do you have available on your team today right now we have 36 sdrs oh wow yeah we have 36 sdrs 53 employees total at one point we were yeah we've become much more efficient at one point we're over 105 employees and we've slid the model down yeah how does that how does that math work i mean a team of 53 so if you're doing 1.6 million at run rate right now divided by 53 employees that only leaves like 31 000 of like revenue to per employee like to pay them that's really really low right well the way we're able to do it the way that we're able to work the model is we use labor efficiencies by going to um first of all we're using heavily using technology so everything that can be automated is automated we've built a model that that handles all the sales ops all of the list building everything included and we found that the best talent that we've been able to find for the spend is in eastern europe and this is after testing everywhere you can imagine these are these sales so of the 53 these are these are the 36 sdrs yes wow i mean okay so let me ask the obvious question my auntie's probably wondering nathan i sell in the u.s i don't want an sdr with like a heavy heavy polish accent trying to sell to u.s customers i don't think that's going to work right yeah if that were the case we wouldn't be in business so i would have to say i would have the same i had the same prejudice in the beginning and then but i'm a i'm like a scientist so i don't you know i i don't to me i'm do experiments and i might test that hypothesis and say okay well i've got guys in the states because i've hired in the states and then i've got guys in eastern europe let's say or guys and gals and and if the results are better over there even with the accent um i'm going where the results are i'm going where i get the biggest roi on my money i don't have a i don't have an opinion beyond that i want the best return on my capital and the interesting thing also nathan about this is that i could put you on the phone with two sdrs one would have an accent that's strong and the other one would have an accent that's weaker and you would be surprised sometimes like that's not the determining factor of success there's x factors there's emotional capabilities there's there's all kinds of stuff what we try to do is we try to produce a huge return for our clients we shoot for at least a 200 roi got it how many customers are you working with today clients we have about 45 different clients right now at all so you basically say so for 45 clients how many what are you actually if i pay 3800 bucks today you're giving my s you're giving my sdrs a thousand leads or what are you actually delivering there right we work a thousand it's a thousand contacts per month that's how we that's how we think of it what we're doing is we're putting those people into a multi-step multimedia sequence not well their email linkedin we have all the tools and they're going out they're getting like maybe there might that's not a thousand phone calls that's a thousand contacts that are being worked through how does that translate though so you have 36 sdrs on your team but working working leads could be all automated so at what point does the sdr pick up the phone or do something to help work that's a great question because it's a great question in this world it's all about tech we have this huge like oh i can just it's push button top of funnel i will tell you this today nathan 80 to 90 percent of the results meaning the leads that the the meetings that we book a human being picking up a telephone speaking to another human being and booking that meeting so with all the time that doesn't mean the tech's not involved doesn't mean the sequences aren't going and you're holding on i don't wanna i don't wanna lose this that you're working a thousand leads your 36 sdrs are calling calling these leads for me b2b sas coming that wants help but i don't want to hire a full sdr i'm paying you to do this 300 a month they're working a thousand leads they're setting up meetings is that the pass off point your sdr setting up meetings on my someone on my team's calendar that's exactly we don't do anything except set the meeting our goal is that your s your ae resources or whoever your sales people are should not be involved unless there is a qualified interested prospect on the other end of that line that's our need how many of those were there last month total across all 45 customers how many meetings did you book qualified meetings oh that's a good question i don't i'd have to look i don't know man i will say the reason i'm i don't i would it's a good it's a good question i should it's a curveball don't know have to look the reason i'm asking is what do you think a b2b sas customer would want if they're paying you to work with that's a great question would they be happy with 20 booked meetings or look everybody would be happy with infinite book meetings right like so everybody gets on the phone with me and they're like all right well i want 50 bookmaker where do you come up with that what we do is let's be realistic let's go outbound and see what's possible in the real world let's get a quota and let's try to beat that quota but let me give you this i mean basically the financial algorithm is pretty simple you're paying me money for x for sales activities we are going to try to convert those sales activities into leads you don't care about leads you care about meetings so what is the cost per meeting then once we have that established how many meetings do you need to close a deal and everybody screws this up as well because they think they close everybody and yeah okay on non-cold traffic if it's your you know your wife's or your your husband's you know bridge partner fine you might close that deal or whatever or golf partner you might close that deal at a higher rate but if it's a cold call lead somebody on the other end your call your close percentage is going to go way down so let's get a realistic funnel let's get a realistic financial algorithm together and what that looks like it's like let's say you're you're in the game let's put it this way andrew hold on hold on let me break this down before you keep going um at some acv this model doesn't work because the puncher pricing plan is too cheap what's that we say 20 the more the merrier but in an ideal world you at least have a 20 grand acv administrator so i'll be listening right now right that's that's interesting right so if you're selling something less than 20 granny or you have no option to sell anything for more than 20 grand a year this won't work for you it also gives you how you break 10 million 20 million bucks it could work it could work i mean i can tell you it wouldn't because the volume would have to be so high right uh it would be very hard to make it work so i'm just the lesson i want to give to the audience right now though is you guys if you want to build a 10 million dollar sas company you have to have a clear path to an engine that allows you to close fifty thousand six thousand financial algorithm you're buying sales meetings at x and you've got you add your close percentage to that and then you have a cost per closed customer and if that's more than you spent on the sales activities you're golden yeah yeah very cool now you've bootstrapped andrew we're running out of time here you're bootstrapped right sure yep 100 no any plans to raise or no we've had people ask at the moment no we're happy to run on our own capital at the moment i'm not saying that not not in you know it might happen in the future but at the moment we're happy we don't see a better return for our own money except in the business we think that's the best return we can get for our capital and and last question here um it's really hard for me to tell who's good at this and who's not right so we've worked with ready hire and aleub steven who worked with zoom info early on we worked with the full funnel crew i get outreached by probably 10 of these kinds of companies a day and it's always so difficult for me to cut through the noise and figure out who's good who's good besides you who's how do you measure who's good well i would i would i you know we we focus on being the best that we can be i mean ultimately at the end of the day you have to try you have to find a way to give to to you have to what if i were you i'll put it this way better way to answer that question is if i were you what would i do to determine what company i was going to work with i would talk to the customers right i would talk test every one of them right right i would either test if i could or if not i would at least talk to their customers and get specific financial information about not financial like meaning how many leads are you getting for them how many meetings are you getting that kind of thing i would want to find out that information if i could and if not i would i would at least want to talk to the customers and say look man what have you done for them that's the best you can do otherwise you have to try that everyone's going to say they're the best man everybody drew good stuff man let's right here with the famous let's rub it with a famous five number one favorite book favorite book at the moment would be uh searching for and maintaining peace uh by jacques philippe attaining peace number two is there a ceo you're following or studying um i would have to say uh always charlie munger warren buffett yep number three what's your favorite online tool for building next sales right now i love notion i'm a huge notion fan we don't even use it in the company but i'm the innovation officer i think notion is our future i love notion number four how many hours of sleep do you get every night six to eight man okay that's good and situation married single kids divorce no kids no kiddos okay and how old are you i'm 49 years old 49 last question something you wish you knew when you were 20 um wish i knew when i was 20. um there's no easy way guys he started off as an sdr and said you know let me build a system to help people do this better lunch in 2018 2019 at 129 000 bucks in revenue scaled to 1.2 million last year about a hundred thousand bucks a month right right now up to 140 000 a month run rate also replaced himself as a ceo because he realized he can't do everything and he loves being creative in the cio role in said chief innovation officer they're serving 45 bbc customers helping them book meetings right for their aes so that you don't have to hire full-time sdrs yourself and incur that p l expense interesting model a lot of people are going this route these days when they were trying to figure out their sales motion 53 on this team right now 36 or sdrs ready to help you guys out andrew thanks for taking us to the top thank you nathan appreciate it man 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 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathanlacka.com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode and if you enjoyed it click the thumbs up we get a lot of haters that are mad at how aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya