How Perfectcloud CEO Mayukh Gon grew to $32M revenue and 850 customers in 2020.

hello everyone my guest today is gone he's been working in the technology industry specifically cyber security identity and access management for the past decade and a half he's been part of multiple successful startups as an early employee before he ventured out on his own he's also consulted for fortune 500 companies mayuk are you ready to take us to the top absolutely all right you're working on perfect cloud dot io today tell us what it does and what your revenue model is how do you make money so uh perfect cloud is a unified cloud security platform predominantly in identity management single sign-on and data rights management as a service our revenue model is pretty straightforward as a subscription-based revenue model as well as uh some of the big companies are using it as a licensing model as well interesting so yeah so on average i don't want to go down every customer cohort because it's a short interview but on average what are companies paying you per per month or per year to access your technology uh anywhere between five dollars uh per user per month to about twenty dollars per user per month okay if we go above the user level and just talk about logo the whole the whole organization so like on average are we talking a grand a month 10 grand a month 100 grand a month uh range is anywhere between two to about 20 grand a month okay 2 to 20 grand good that's still a pretty big range i mean are you more long tail in average around three or four grand a month or are you really focused on 20 grand a month enterprise uh we are targeting big ones now uh but uh besides that uh it's uh predominantly anyone that comes on board and registers on our service okay good okay but minimum there we'll say is two grand a month something like that yeah okay good put this on a timeline for us when you launch we launched our product in 2015 uh august and uh we've been growing at around three to four hundred percent year over year uh since then that's great how many customers have you scaled to today uh approximately 850. okay 850. that's great i mean so can i take 850 times that 2000 a month you just told me you're doing about 1.7 million a month [Music] right that's great and so when you say 300 or 400 year-over-year growth i mean that would mean you were doing what 400 500 grand a month a year ago uh well uh we would say we were about uh 250 uh enterprise customers last year so we are at 8.50 at the same time this year i see okay so december december last year 850 grand a month now more way more than doubled 1.7 million now yep that's great okay i mean so most that growth is it well you just told me you added about what 600 customers do you have a do you have a powerful expansion pricing axes yet or is it really just adding number of seats to older customer cohorts uh you know we don't do marketing per se it's all word of mouth so uh for us it's uh companies that come on board 90 of the times that it is the same company that helps us get acquire more customers so it's uh it's ramping up and we pretty much bootstrapped uh from day one are you still bootstrapped today absolutely mayuk i love that you're my favorite this is great where uh talk to me about the team how many people so currently we are about 35 employees globally okay and where is there a hub where is everyone based so uh i would say most of our developers are in india and canada and uh we have some marketing folks uh spread out between india us canada as well as uk okay so india and canada mainly and then talk to me about some of the other you know critical things in a sas company so churn is critical what's your churn look like today and how do you keep it low uh we had a very bad churn uh two years ago how bad uh it was close to fifty percent uh 50 revenue in that year yes okay and why was it so high so it was uh because the product was still immature and slowly based on the companies that stuck around we improved the product immensely and plus people didn't understand the security and privacy that we were providing so they thought it was too much for them so they say hey you know what uh let's just move on to the ones that are uh you know well known rather than more secure so now the same people are coming back after they found out that the the companies that they had gone to they are getting reached left right and center okay so what's your turn today your last 12 months revenue turn was what about 20 okay so that's not bad and then what's your expansion revenue on that same cohort [Music] well you know what the funny thing is we uh are putting in less than five percent for that uh currently but we wait what are you sorry i don't understand what that means so the total revenue that we are generating right now we are putting five percent uh of that for the people who are leaving us uh because uh we feel that if we put more than five percent right now we may not be able to get the uh companies who are leaving us back so rather i'm sorry i'm still not following you're saying you put five percent of your total revenue towards customers leaving you i don't know what put means what do you mean so we are diverting it to uh the acquisition instead of going for a newer customer we are going for the instead of uh going for the same customer base uh we are going for newer customer rather than keeping the same customers who were not good enough for us oh so you're basically telling me you spent five percent of your revenue on marketing correct oh you could have just said that that's much easier all right are you so you're churning 20 to your revenue so if you look at everyone you signed up a year ago right in december of 2016 or 2017. 20 of them churn right do you add does that same cohort do they add do they grow by more than 20 so yours your net revenue retention above 100 um good question i don't know about that don't i may have to check yeah and you have to check it out okay talk talk to me about you well you just said five percent of your revenue goes towards acquisition but if you want to sign up a new hundred thousand dollar a year sorry a new two thousand dollar a month client what will you spend on cac customer acquisition uh probably about a hundred and fifty to two hundred dollars uh based on what we have been spending uh for your customer acquisitions so far hold on come on i don't 150 to get a new two thousand dollar month customer that's fully weighted cac not just paid spend but but head count everything yeah it is fully rated yeah it is okay so why why wouldn't you go then put a billion dollars in that channel uh because we don't have that kind of money right now so for us to go that route we'll have to go for funding which we are not why though you only have 35 people well hold on i don't i'm something's missing here you should have tons of money you have 35 people so your headcount expenses are low and they're in india and canada you're you have you're and you're doing 1.7 million a month or you're doing almost call it 20 million dollars a year you must have a ton of free cash flow we do but uh we are going into a new channel of business which would require uh we are moving into blockchain so we are doing a lot of r d on blockchain okay so if you look at your current kind of monthly revenues obviously your cash flow positive because you're bootstrapped i assume correct okay so so i mean can i ask how much like are you 10 bit to margin or 20 and then are you taking all of that and putting it into blockchain research we are about 13.5 percent right now 13.5 ebitda okay so when that money sits in the bank account at the end of every month what do you do with it uh we are reinvesting in new uh uh r d work plus uh new patents that are going in new what patterns oh new patents got it yeah do you have a bunch of patents today uh we have about three of them uh we'll be adding another five uh hopefully by the end of next year have you defended any of them in court nope we didn't have to so you don't know how strong they are then yet uh we did a patent because most of our patents are co uh developed with university of toronto so uh we are pretty comfortable uh that we have a good uh backing out there what does a guy like are you so founder yes so we have two more founders okay so okay did you guys just split it 30 30 30 at the beginning or no no no no no so you're are you majority uh majority so so what's a guy like you you're sitting on a cash cow you're in full control you know you're doing 20 million bucks a year right what is what is your run right now about 20 million bucks a year about that yeah or a little bit less than that but all right yeah around there yeah okay good so so i mean how do you i mean you could just make yourself and your other co-founders and your employees and everybody rich by paying dividends right i mean how do you create personal wealth out of this thing would you consider like a secondary offer right now if a private equity firm came about 60 for i don't know 100 million not yet uh we are waiting for the uh second or third launch next year and after that we will be doing that you've got to be in talks you've got to be in talks though right now with people wanting to acquire you we have been approached but we have stepped back stepped out of the whole deal why didn't you like it uh because i think the patents that we currently have can be utilized for the next seven to eight years in terms of data privacy and you know data privacy is one of the most important things right so we feel that there can be much more what we can do right now than uh and really our main motto when we started the company was not to make money money was a secondary thing for us we wanted all of us suffered data privacy hacks and data breaches so we wanted to create something which actually helps people and companies so i think we should be good in the next three four years especially after we include blockchain in our uh product offering my uk have you talked to vista equity partners uh name sounds familiar but i'm not sure no i mean um if you did do a deal would it be with a strategic or would it be with like a big private equity from like vista uh strategic because because they'll pay more for the patents interesting what so if you're only asking with the pace i've never valued patents before i know how to value a software company off arr but when you add your ar plus your patents i mean do you put yourself in like north of 100 million valuation uh good question uh we don't we don't know that uh this is just a feeling thing just a feeling thing for you being canadian we are so damn conservative it's not even funny i mean so uh so you're saying if i write you a 30 million dollar check right now you'll sell me the company i have been given that uh a carrot already and i said no to it so maybe not well you should say i mean that's i was that was a joke i mean that's only like 1.4 x of yeah uh interesting yeah so hey you know things things are happening so fast these days uh uh especially in technology if if we don't keep innovating we will be behind in a lot of things so i personally feel i think the innovation is the best route to go and you know what happens to innovation when a big company buys a small company out it dies yeah so so who's your perfect who's your perfect exit like name name one or two companies that you would love to be acquired by in three or four years you know uh we joke around a lot uh we say hey facebook uh your privacy issues all will be gone if you were to acquire perfect cloud would you like working at facebook i don't think so why uh too many uh too many things which don't jive with our mentality uh especially the thing that we care about the most privacy and security if that is being used to create revenue model uh it would not sit well with our founding members so no so yeah emc would be a good company for us uh even dell for that matter yeah and have you what's the largest acquisition offer you fielded today but turned down [Music] uh uh north of 35 north of 35 okay interesting very good all right uh miuk let's wrap up here with the famous five number one what's your favorite business book uh you know i love uh anything that is written by william o'neill what was his last book i think uh i like anything that has to do with the market conditions well name one of his books though so we can look them up uh stock trading stock trading okay number two is there a ceo you're following are studying right now uh elon musk number three what's your favorite online tool for building your company uh there's so many of them but i think salesforce is one of them number four how many hours to sleep to get every night between six and eight good and what's your situation married single kiddos married with two kids married two kids and how old are you uh i'll be 48 88 very good and last question what do you wish your 20 year old self knew ah good question uh how to sleep more guys sleep more coming from my uke founded founded perfect cloud back in 2015 now 850 customers paying 2 grand a month doing 1.7 million bucks a month or just south of 20 million bucks in arr that's up from 850 grand just 12 years ago their bootstrap which i love 13.5 ebitda margin they're using that cash flow to reinvest in some blockchain related stuff now but currently a pure sas company team of 35 in india and canada 20 revenue churn last year doesn't know net revenue retention yet but again happy to spend about 150 bucks to get a new two grand a month customer obviously payback they're super healthy as they look to scale turn down walked away from many offers one of them north of 35 million bucks hopes to maybe sell or do a deal in three to five years mayuk thanks for taking us to the top thanks nathan