How Qasymphony CEO David Keil grew to $20M revenue and 648 customers in 2018.

hello everyone my guest today is David Kyle he's a software veteran brings a growth-oriented leadership approach to his job today as CEO of QA Symphony for more than 25 years he's built a strong track record of business success before this company he was CEO at digits drive a provider of e-commerce solutions to large membership based organizations he sold that business to a large private equity company before that he was CEO of integrated broad brand services a software and services company and during his tenure the company doubled in size completing two strategic acquisitions and established a market leadership position in the tier two broadband space David are you ready to take us to the top yes I am thank you all right yeah you know we had a lot of fun I think last time when you came on which was back in Mo's at jamieferry mark it was April of uh April of this year so a couple months ago but you guys had that point in past I think 1.6 million bucks in mru had about 570 customers you know you had about a hundred percent year-over-year growth and retention metrics look great you had a hundred four fifteen percent net revenue or attention annually I think you said you also have some news you just merge so walk us through first what you do for those that missed the first interview and then let's talk about why the merger absolutely thank you QA Symphony is a SAS company that sells software to large developers large companies that have development teams and testing teams globally generally its global 2000 focused and what we do is provide a solution that really improves the speed and improves the productivity of developers and testers think of us as kind of a Salesforce solution but for the development and testing group and and we have really focused on three primary verticals technology companies where we have customers like Cisco and Salesforce today a large financial services organizations USAA many big banks the largest bank in Australia and then a lot of retailers so any organization that has a an important web facing website with a drive revenue we've had you know many customers their Amazon Office Depot many others so we've been growing very quickly the markets been exploding and we continue to have nearly 100% growth year over year where we're about to hit that 20 million recurring revenue mark this month we'll celebrate that in about two weeks and so not say that that's exciting and just for those of you listening later because the episodes don't go libel to actually record them but we're recording this here on Wednesday August 8th so it sounds like here in August I'll pass that beautiful 20 million mark correct that's right that's great so um so uh you would you would alluded to something that is uh public on June 20th we announced a very important and strategic merger with a company called try census and so it's been a very exciting nearly two months now since that announcement tri census is very complementary to cue a symphony whereas we do focus on a test case management solution more manual testing focused try census has multiple products but has especially well known for their automated solution called Tosca which is in the top quadrant at Gartner and so we not ironically have the same investor so insight Venture Partners which is one of the largest software investors in the world have just recently raised a six point five billion dollar fund had been investors and continues to be investors in both organizations so our board will remain essentially the same and you know we're coming together we expect to close that deal legally in early September and come together as one cohesive company by the end of the year David what was the spark that started that was it insight at the board meeting saying hey you guys should look at solar company David if you like it let us know we can make an intro um an insight played a key role as you alluded to and really there was interest both sides so they saw that try census was very strong in Europe moving into the u.s. very strong and selling to the sea level very strong with systems integrators they saw the us that QA Symphony had almost all of its business in the US and was trying to break into Europe and that was an important growth area that we were more selling into the user base and trying to move up and so it was extremely complimentary and really what the big picture is though is the space like many software spaces is shifting away from kind of older antiquated legacy software providers to more modern providers and we believe as one company now we are extremely well positioned to undoubtedly lead this space of overall software testing which is a thirty-five billion dollar market historically you saw a very successful company called Mercury interactive that was acquired by HP in 2006 HP has owned them ever since HP merged with its software business with Micro Focus a year ago and it's again public record that that business has been declining very rapidly so we're really well positioned to increase our market share each and every year and lead that back category then Damon I want to talk about the mechanics of an actual merger what that means but before you know two months about a month and half before you announce that was when you're on our show I want to make sure nothing drastically changed did you raise an additional capital or you stuff about forty seven point five million in the company well we had raised forty seven point five and try census has been around longer and is actually a large organization so they've raised over 160 million okay I'm with insight and then round out just some of your other numbers team size still about 130 and still about 570 customers so we so so we're every month that number will go up so weird about 145 now employees and about 648 customers as of this Monday that's great okay great and then um so walk me I want to get into the mechanics of this cuz it's rare that we get someone right on the back of a merger right so so when people think we all should I merge with a competitor or someone in my space maybe not a competitor maybe something complimentary the first question is especially for an ego ego perspective is wait are they gonna be CEO or am I gonna be CEO let's just start right there how do you handle that question sure very very relevant question ultimately what I have used as my guiding principles are some businesses and one in particular I worked at years ago I worked at a public company called choice point and I saw a model there that I really saw it was very successful where there was a CEO and a CEO who were very complimentary and you know terrific business partners and I saw that that combination both of those guys by the way were terrific mentors of mine I saw that that combination was quite effective so that same model is one that we've embraced here at Tri census the company will be named tri census when we close and I will take on the CEO overall and Sundeep is the CEO there he has a background that's really unique he was at HP and led the acquisition of mercury back in 2006 so his knowledge of this arguably is better than anybody else in the entire globe today and he brings that history that experience as well as having started successfully many other software companies he's out in Silicon Valley so I I feel very lucky to have someone with his experience on the team and his his knowledge and his um you know overall view here is invaluable to us and walk me through so the combined kind of asset together try CentOS plus QA what what I mean revenue wise I mean we'll be above 100 million in ARR no yeah I can't be specific given that we're private but I think I can can speak generally that will be approaching a hundred million well your twenty you already said you're about to pass twenty so I'm just trying to get a sense of together what it will look we're you know we're gonna be in that 8200 range okay um the reason I asked that David is we couldn't sorry to cut you off but the reason I asked that because a firm like insight knows very well that the the multiplicative effects of a larger AR company in terms of an exit valuation IPO you know you get up you get a better multiple you're generally more healthy throughout 100 million versus 20 million right so they know that especially if they're gonna go out and try and sell it's like a Vista or or a private equity firm right so how do you how do you how do you make sure you understand any bias that insight is bringing to the table as an investor in both companies we're living in there you know known as one of the most successful investors in the software space so actually having their strategic you know views and and reinforcement behind this is one of the things that gave me huge confidence that this was the right move because they've had so much success in in bringing companies like ours together to ultimately achieve you know a terrific outcome I mean for us at QA Symphony it's not about ego it's about ensuring that we're the leader in the space we like to win you know we like to have fun we like to succeed and make an impact and you know now this merger we're try census will put us even in a better position to do that longer-term DevOps is a hot space do you know we've had you know the SmartBear folks came on recently 7.5 million in monthly recurring revenue sauce labs I'm sure you probably know Charles well then there's others that don't compete directly with you but cloud ability cloud check are all doing 2030 million bucks in ARR is this merger the start of what might look like a much larger roll up of some of these other tools as well and this first merger is the hub I think that what you're noticing and pointing at is that there are many fast growing and successful companies in this space that bring the newer technology and the more modern approach and we're all really smaller players going after a huge pie where you see the legacy providers like Micro Focus and IBM CA struggling to maintain market share and so I think that they are going to be room for multiple winners multiple you know companies that grow we don't compete directly with those companies in a meaningful way in fact we often see folks like like sauces you know potential partners and complimentary the the reason and the ecosystem can be quite complex and you know the time here doesn't allow for that but as you think about the entire end-to-end that a software developer and tester goes through in their in their entire you know daily approach to putting out excellent software very quickly it involves multiple capabilities and it's more than one company traditionally can do so huge space huge opportunity listen we're growing as a collective company you know in kind of that you know 70 percent plus we see the market is wide open we have no reason to believe we can't get to be a billion dollar company and I'm sure there'll be some others that also have a similar path David just put directly my simple question is is are more acquisitions in the future to drive additional growth in the space there's none planned today and we feel like we've got the assets that you know get us where we need to be you know you always want to be aware of other you know levers that drive growth but right now between try census and cue a symphony and try sentence made a couple of acquisitions earlier a company called flood that that's quite strong and and some others and so we feel like we've got the assets to win today tell me about how you communicate this to your team I imagine when you put out that initial press release sometimes people see the upside they say yeah it's gonna be great others go oh my gosh am I gonna have a job after the merger how do you communicate this to the team well you're certainly correct and that mergers you know many folks have experiences of mergers that often involve a lot of cost reduction what we were able to say here with 100% confidence and credibility is that there is no cost reduction that this is all about growth that the teams are entirely complimentary and we literally are in a massive hiring phase and are not reducing any positions as a result of this in fact many folks on our team and I'm the Tri census team are taking on significantly more responsibilities from a global perspective from an account ownership perspective so there were certainly a lot of interest to understand the details as we've gotten further into it our team you know has gone from somewhat excited to extremely excited because they see the power of you know the combined entities the 172 that try sent us has raised was was all that mainly from insight or were there any PE firms like a vista equity taking a ten or twenty percent i believe it was a hundred and sixty five that they've completely within sight and they had raised a little bit of money in an earlier round you know well before that interesting okay great very good um well any other any things that surprised you as these conversations went down and specifically David what I'm hunting and digging for here is people listening right now might be considering the same kind of thing is there anything they should be aware of that you weren't expecting going into this well you know as we all know that folks have done in a M&A is hard and what I would tell you is what's what's really been critical to us is to have that global coverage which we didn't have but certainly now being a global company with offices in Australia and offices and or throughout Europe and offices in India it's just much more flex so I would say get ready to buckle in and make sure you know you've put the time in at home because the travel the travel is is gonna be extensive but you know if you're if you're someone who loves change and likes to win and likes to be energized then this is the right move and you know for us and me personally it's been incredibly energizing and exciting do you look at things like okay how our tech stack is gonna be combined to offer a more comprehensive product or will they basically still stay separate entities but all part of one organization no we're absolutely going to combine the product strategy we'll have a combination of the different aspects into one common platform and we actually are going to launch the first phase of that combined entity at accelerate in October which is try sentences annual user conference I believe it's a second week in October so for those that are you know make it to Vienna I think it's October 7th and that's where they could learn a lot more about the combined product strategy what happens to the the investors on your cap table that are not inside venture so people on your cap table that are not on try sentence cap table what happens to them do they get a payout as their money changing hands in this merger in this case all of our institutional investors were have been connect stream ly excited to remain with the company and feel very confident so they've rolled their investment forward and that's been a very they view it as a very positive event was there additional capital raised on the on the on the try sent decide to fund any aspects of this or it really was a no no cash exchange merger no no cash try census had two significant cash on their balance sheet from raising money two years ago so that was not that was not a need that we have it this time my point was sorry they're not paying you guys I'm making this up forty million bucks to buy the company this really is a merger it's a stock deal correct okay got it interesting very good David let's wrap up here with the famous five number one what's your favorite business book uh gosh I still like probably I would say either good to great or crossing the chasm cross yeah yeah you're awesome a chasm is a good one that was a good you're consistent oldie but goodie I just say you're consistent that's the same one you said last time that's good number two is there a CEO you're falling or studying right now you know I I follow Bezos you know he's by far to me the never one CEO the the new CEO over Microsoft is incredibly inspiring so I'm starting to follow him as well number three David what's your favorite online tool for building your business as I mentioned last time LinkedIn bytes buy it by a longshot number four how many hours of sleep begin every night I think I said seven now it's down to six I think I lost an hour the merger will do that to you I know what your situation married single kiddos been married for almost 23 years I got two teenagers a son a teen a daughter 15 so a lot of people end up teenagers can feel my pain and how I'd already did so 54 years old 54 last question when he was your 20 year old self knew what a great question I think I think that to continue to really travel more every time I did travel outside the country back then I look back at that is you know amazing experience and I wish I had done you know three times as much guys travel more he's going after the devops fades the space is a Multi multi multi-billion dollar industry he made a decision with his board recently that trice at Rice entus merger would make a lot of sense they're about to pass 20 QA Symphony is about to pass 20 million bucks in ARR across 648 customers 160 employees and the team's growing rapidly again as they work this year to complete this merger the combined entity caught will be do between 80-100 million bucks gives them more an international exposure he'll be traveling more but again they're going after much bigger pie David thank you for taking this to the top thanks for having me guys appreciate it