How PeopleGrove Reached 170 Customers and 120% Net Revenue Retention with $2.5M Raised (Interview with Co-Founder and CEO Adam Saven)

Introduction and Background

Nathan Latka

00:00Hello, everyone. My guest today is Adam Saven. He is the co founder of PeopleGrove and has served as its CEO since inception. He previously worked at Google as a business analyst from 2013 to 2014 performing data analysis as well as informing strategic decisions on the online partnerships group. Before Google, he served as an investment banking analyst in the global technology group at Credit Suisse. He holds a BS in economics from the Wharton School of the University

00:23of Pennsylvania. Adam, are you ready to take us to the top?

Adam Saven

00:26Let's do it.

What PeopleGrove Does and How It Makes Money

Nathan Latka

00:27Alright. Talk to me about PeopleGrove. What are you guys doing? How do make money?

Adam Saven

00:31PeopleGrove is all about helping students, access mentors, coaches, people they need to succeed, how we make money, universities license our software to bring this to their schools and make this a reality.

Nathan Latka

00:44Interesting. Pure play SaaS model?

Adam Saven

00:47Exactly. Enterprise software.

Pricing Model and Contract Structure

Nathan Latka

00:49And what is... I don't wanna go down every cohort. What's the average customer pay per month, would you say?

Adam Saven

00:54Well, I mean, it's it's big spectrum. We've got initial contract size and, you know, you're 15 to 20 k per year all the way up to six digits now.

Nathan Latka

01:02Yeah. What would I know? I don't wanna go down everyone, but what would you say in averages? $30-40 grand a year? Alright. Something in there. Okay. Good. And let me just break that down for me. So someone that pays you $30k per year, what are they getting? Is it number of seats or what?

Adam Saven

01:14Yeah, so we you know we have a host of modules because we're working with enrollment offices to drive yields, academic success to drive graduation, so it's based on what modules they're licensing from us and the size of their institution. Universities, it's tough for them to do per seat because they need certainty of budget.

Nathan Latka

01:35Yep. And otherwise you have to get approval every time they need more seats, right, which is a pain in the butt.

Adam Saven

01:39Exactly. So you know we're talking typical term length, three year term.

Nathan Latka

01:44Got it. Well, all cash up front?

Adam Saven

01:47Annual up front. So we don't... Not the full three years, but As I say year and up front.

Nathan Latka

01:52I'd be pretty impressed if you're pulling three years of revenue forward, although that'd be great.

Adam Saven

01:55It it it's happened.

Nathan Latka

01:57Yeah, that's great. Alright, put this on a timeline for me. When did you launch?

Company Origin and Stanford as First Customer

Adam Saven

02:02Launched, by walking into an office at Stanford with a pretty PowerPoint and no real product. That was end of twenty fifteen. They're like, great. We're making a decision in a product in two months. We sprinted, got a product out in early twenty sixteen, and a really good customer logo to reference.

Nathan Latka

02:20That's... Okay. So you closed Stanford?

Adam Saven

02:24Customer number one.

Customer Count and Key Logos

Nathan Latka

02:25I love that. Alright. What do you got today in terms of total customers on the platform?

Adam Saven

02:29170 institutions.

Nathan Latka

02:31Okay. That's great. And these range again from colleges. Do do you sell directly to kinda companies or no?

Adam Saven

02:38Vast majority of our partners are higher ed. We do have Teach For America that uses the products between their current teachers and their alumni network. And we also have some pilots going with Intuit and Qualcomm as a way of building mentoring around their new student... Their new, employees.

Revenue Growth and Seed Round

Nathan Latka

02:57Got it. If I take a 170 customers times that ARPU you just articulated, that puts you about $420k per month or a little over $5,000,000 in ARR. Is that generally accurate?

Adam Saven

03:07Probably a little bit less, I would say. If I go back to average contract size, probably closer to 20. 20.

Nathan Latka

03:12Yeah. Okay. So if we pull that contract value down, that means you're, call call it maybe $280k a month, something like that?

Adam Saven

03:19Oh, you know, running towards 4.

Nathan Latka

03:21Yeah. That's good. When do you think you'll pass four? This year?

Adam Saven

03:24Targeting end of twenty eighteen.

Nathan Latka

03:26Nice. I like that. And what has growth been like historically? So past twelve months, you know, where were you in August 2017?

Adam Saven

03:32At one.

Nathan Latka

03:33Oh, okay. Wow. So that's, I mean, that's pretty good growth. You're going from $80k or $88k a month up to call it $280k today. What's driven most of that growth?

Adam Saven

03:39We were lucky to raise a seed round exactly twelve months ago. So one scaling out sales. A big part of our model is just landing in with an individual department at a school. And then our CSMs do a great job of identifying opportunities to expand. So it's not only new business, but a lot of expanded revenue.

Nathan Latka

04:00You mentioned a seed round. How much total have you raised today?

Adam Saven

04:04So I have this whole other story of a failed company, this particular one, at seed round was 1.8. And then we had some convertible notes, so a 2.5 total.

Nathan Latka

04:16Two five total. Quickly give me the failure story. Did you raise a bunch of money and just crash and burned?

Adam Saven

04:21No. Didn't raise that much. Lived out of a trailer park, and rented bunk beds so we could just keep this thing moving, but it was your classic, think of a great idea sitting in a room, not validating it at all, and that was Tinder for jobs. Did not work for a million different reasons, but a great learning experience.

Nathan Latka

04:44Interesting. Okay. So you obviously, you know, shut that one down 2015. You get back into PeopleGrove. It wasn't a pivot, right? You actually shut down that first company?

Adam Saven

04:52No. It was a was a pivot in terms... Shut down in terms of out of staff of eight, went back to two, at about 10% of the initial funding left and just somehow, like, made a made a turnaround.

Nathan Latka

05:08What year was that?

Adam Saven

05:09So that was shut doors like middle of twenty fifteen. At that point, our investors were like, well, it's not really worth you giving us our money back. Do you have any other ideas in you? And yeah, I just started grinding back and that was turnaround.

Nathan Latka

05:26And you had what, call it $250k in the bank at that point?

Adam Saven

05:30No. Ten twenty.

Nathan Latka

05:31Oh, 10 or 20%. Okay. That's way less than that.

Adam Saven

05:34We had 10 or 20 k left in the bank. When we closed Stanford, we had our initial convertible notes of 500 k. We were down to 20 k in the bank.

Team Size and India Engineering Team

Nathan Latka

05:44I see. Oh, wow. Okay. Good. So big turnaround. Now what are you at today in terms of total team?

Adam Saven

05:4932.

Nathan Latka

05:4932. And where's everybody based?

Adam Saven

05:5318 here in SF. We've got an offshore team in India. 14. They're great. And that's

Nathan Latka

06:00There's a lot of people that ask me. They go, Nathan, how are these people on your show launching these extremely efficient dev teams in India, especially when one of the founders is not from India or, you know, Kiev, Ukraine, or those places in Argentina? How did you spin up your India team?

Adam Saven

06:16I'm really lucky. Our... One of our early engineers was a guy named Nitin. Very well experienced and he was our first he was a full time engineer for us. And he just, I mean, that's actually funny. He said, hey, I've got a actually have a brother who's also looking for a job. I can definitely vouch for him. All of a sudden we had knitted in to cash two brothers, and next thing we knew it, we were

06:42making trips out there, and we knew they had the capability to lead and build a team out there. So yeah, I think the key thing is is having two people that you really trust know what quality looks like, and then my CTO makes trips out there. He knows what good code looks like, and the rest follows.

Cash Position and Burn Rate

Nathan Latka

07:03That's so that's so funny. Good story there. Alright. So I assume today you're profitable. Right?

Adam Saven

07:10We could be if we weren't.

07:11You know,

07:11keeping the hiring going.

Nathan Latka

07:14Are you operating at breakeven? I mean, if you had no money in the bank and you close a deal, I mean, you can't afford to go in the red. Otherwise, you'd be out of business. Are you at breakeven?

Adam Saven

07:21I mean, we're... No. We're good. Like, balance wise, the amount of money we raised a year ago is the exact balance we have today.

Nathan Latka

07:29Oh, you've raised more than 2.5?

Adam Saven

07:31No. No. No. I'm saying our cash balance today is the same as it were after we raised. So each month we're about breakeven. Sometimes, you know, net burn is a little bit negative with the new hiring we're making.

Nathan Latka

07:45Yeah. Sorry. I'm just trying to get us on a timeline. So you had raised $500k. You took that down to nothing in 2015 when you pivoted. You then raised another 2,000,000 about a year ago. And what you're saying is you basically have kept all that in the bank.

Adam Saven

07:55Exactly.

Nathan Latka

07:56Oh, I see. Okay. Great.

Adam Saven

07:57Just just revenue revenue burn has been about equal.

Churn, Logo Retention and Net Revenue Retention

Nathan Latka

08:00Yeah. That's great. So good good position there. Talk to me about churn. You know, churn is critical in a SaaS company. Where are you guys at?

Adam Saven

08:06Customer logos 96%. So of our 170, I think four total have churned.

Nathan Latka

08:12That's retention annually.

Adam Saven

08:15Yeah. Customer retention. And, yeah, for us, product customer actually wasn't a great fit to begin with. What's more exciting is the net churn. So, you know, while the logos we churn represented about 50 k of ACV, our expansion revenue has been over 500 k. So net churn looks really good.

Nathan Latka

08:36Yep. Net negative churn there. Do you know kind of annual net annual retention? You're north of a 100%. Do you know by how much?

Adam Saven

08:44Probably about 120.

Sales Team Efficiency and AE Economics

Nathan Latka

08:45One twenty. Yes. That's that's... Those are good numbers. What about acquisition? What are spending to acquire customers?

Adam Saven

08:51Looked at a great answer for you right now. You know, it's a it's a direct sales effort. Got two AEs working at it. I don't I don't know if I got a great answer for you.

Nathan Latka

08:51That's okay.

Adam Saven

08:51On the numbers.

Nathan Latka

09:03Let me ask let me ask kind of a different question. How quickly do you like to get your money back? So if you pay an account, you know, account executive, a commission, things like that, do you get a payback in, call it, three months, four months? When's it... When's that customer profitable?

Adam Saven

09:15When is the when is our new well we're getting that you know annual contract size up front so for a new AE if they're closing four deals they've already paid for themselves.

Nathan Latka

09:26Yeah no no I got that. If you so a new customer let's say is paying you $30-40k or $20k a year is what you said, I think earlier, right? You pay $10k to acquire that customer on a deferred basis, not a cash basis, on a deferred basis, that's essentially six month payback. On a cash basis, you're getting the full $20k upfront, it's instant. But on a deferred basis, is it about a six month payback?

Adam Saven

09:48Yeah. That sounds about right.

Nathan Latka

09:50I don't... Also don't wanna make up numbers that you don't actually use to measure. So let me just ask you a general question. Like, how do you think about cash allocation through your sales team and your payback periods?

Adam Saven

09:58Yeah. To be honest, at this stage of our company, like, it's all about top line. Like, you know, we have an efficient business, but, you know, my... I'm not myopically focused on payback period or cost to acquire customers. Focus on how are we doubling revenue, tripling revenue.

Nathan Latka

10:16Okay. Fair enough. But like, just to be fair, like you can't grow revenue if you have no money to grow the revenue, which comes back again to like, like how efficient these AEs can be.

Adam Saven

10:26Yeah. Well, I I mean, the AEs, you know, they're very efficient because let's say OTE is one fifty, one sixty.

Nathan Latka

10:35Break down what that means for people that don't know the acronym.

Adam Saven

10:38OTE, you know, on target earnings. So they're hitting quota. They're taking home one fifty, one sixty, and their quota is, let's say, 720 k of ACV. Like, it's just... It's efficient. The model works. So

Nathan Latka

10:51So why not go out... Why why do you have only two people then on that team? Why isn't it 20 people?

Adam Saven

10:57That's that's what I mean. So first was, okay. Founder can sell AEs, two can sell. Next stage is now we're doubling up the sales team. But for me, I'm cautious not to overhire. I need to prove that the playbook is there before putting others in a position to succeed, hopefully.

Fundraising Plans and Acquisition Question

Nathan Latka

11:14Yep. Are you raising capital right now?

Adam Saven

11:18We haven't we haven't sought it. Right now, the cash balance is good, and we have all the incentive in the world to just keep growing the business organically if we have the cash.

Nathan Latka

11:28Okay. No plans to raise capital right now, or at least it's not something you're pursuing. You never want to say you're pursuing capital because then you look weak. I mean, if someone made you an offer, is it something you're open to?

Adam Saven

11:40Depends on the offer.

Nathan Latka

11:42Would you... Let's say if you had... Let me ask you differently. If you had another $5,000,000, where would you invest it?

Adam Saven

11:48Sales, new product developments. Yeah. I mean, that's something we're thinking about now right now. So as a team, we don't have a VP of sales. We don't have a VP of customer success. There's a lot of hires we could be making. So to be honest, the question you're raising is a question we're thinking about right now, but it's not taking up too much of our mind share.

Nathan Latka

12:08Are you in any acquisition talks right now to sell the company?

Adam Saven

12:12Couldn't share that.

Nathan Latka

12:13Okay. Interesting. What what would drive that decision for you guys?

Adam Saven

12:18To take a squeeze or take an acquisition offer and

Nathan Latka

12:18No.

12:23No. No. Like like to sell or not to sell in your mind. What what what do you think about when you think about both those options?

Adam Saven

12:29I mean, there's a lot of things you think about. You think about, you know, if there is an acquirer, what's what's their plan? How do you fit into their plan? You think about timing.

12:40You think about your own personal objectives, where are you in your life and what matters to you. You think about your mission and vision, how you're going to get there, do you do it alone? Do you do it by raising money from investors? Do you do it by way of working with another? So it's a lot of different factors to consider. If we're lucky enough to consider those factors, that's great, But for me, like, best thing

13:07you can do is just focus on growing the business, and all else kinda follows.

Famous Five Rapid Fire

Nathan Latka

13:11Adam, let's wrap up here with the famous five. Number one, what's your favorite business book?

Adam Saven

13:17Favorite business book? So pretty sale. Give and take. Give and Take by Adam Grant.

Nathan Latka

13:23Number two, is there a CEO you're following or studying right now?

Adam Saven

13:30No.

Nathan Latka

13:31Number three, how many... Oh, sorry. What's your favorite online tool for building your business?

Adam Saven

13:36I like Outreach.

Nathan Latka

13:37Number four. How many hours of sleep do you get every night?

Adam Saven

13:41Five or six.

Nathan Latka

13:41That's pretty good. And what's your situation? Married, single, kids?

Adam Saven

13:45Fiance just got engaged last month. Exciting.

Nathan Latka

13:48Congrats. That's exciting. No kids yet?

Adam Saven

13:50No kids, but I've got an amazing puppy.

Nathan Latka

13:53That's good. And how old are you, Adam?

Adam Saven

13:55I am 28.

Nathan Latka

13:5628.

13:57Last question. What do you wish your 20 year old self knew?

Adam Saven

14:04Well, I guess 20. I'm in college. Focus less on grades, focus more on people and, just helping others, and you can build an amazing, group of people from helping.

Nathan Latka

14:17This interview is for all of you college students right now worrying about your 2.8 GPA, worry less about grades and more about hustle. Adam created his company after a pivot in 2015, really got focused on PeopleGrove, landed Stanford as their first customer. Today, they've got about 170 customers paying, call it, $20k per year. So about $280k per month right now in revenue. That's up from $88k or about a million bucks in ARR just a year ago

14:43in August 2017. They've done this in an extremely capital efficient way. They raised $2,500,000, most recently 2,000,000 about a year ago, which is all basically still in the bank. Economics are healthy, 96% logo retention annually, about 120% net revenue retention annually because upsells are going so well. Again, team of 32 people based between San Francisco and India. Adam, thank you for taking us to the top.

Adam Saven

15:05Of course, everyone.