How Rifiniti CEO Michael Gresty grew Rifiniti to $3M revenue and 20 customers in 2019.

hello everybody my guest today is michael gresti he's the ceo of rfinity an analytics software company that delivers office space utilization and play mobility and other kpis he's accumulated over 25 years of experience advising leading companies on corporate real estate he's consulted to executives on more efficient buildings and on sustainability in strategy operations and culture following an early career as a software engineer michael you ready to take us to the top yep all right so you're in we work do you work with wework we don't come on michael you got to land that deal that's like a big client absolutely we're working on it good all right what's the company doing how do you make money we deliver an analytics platform which we call optimo we're about to release in february our new update called optimo x it's a bi platform that helps real estate executives measure and manage the utilization of their workspace so they can maximize the value of their real estate budgets to provide the best workplace environment that they can okay and what's your revenue model is it a sas company it's a sas company it's on an annual model uh it's based on the square footage monitored so we're typically monitoring anything between say below and fifty thousand at a high end thirteen million square feet of the customer's office space okay so on average what's the customer paying you per year would you say uh average size of deal is probably 150 000 okay and that's typically about how much in terms of square feet that would be about uh 1.5 million square feet something like that okay and can you put a face to one of these customers can you name one of them just so we can really get a good idea sure lenovo's been a customer since we started the company uh it's a global company with uh workplace workplaces around the world lenovo lenovo yeah so based in china obviously but we work primarily with the north america european apac counterparts also significant operations in latam and michael when you launch the company what year 2012 2012 very good and how many customers have you scaled to today we're over 20 large customers all in the fortune 500 okay now can i take that 20 times that 150 000 acv kind of you just told me you're doing about 250 grand a month right now in revenue uh something like that yeah it kind of just closes at the exact numbers but it's of that order yeah that's fine and help us understand at a high level growth rate so if you're at 250 today what were you doing about a year ago well uh growth rate's been about 10 12 per year okay so are you bootstrapped or raised so we raised uh 3.15 million in two rounds our last round was in 2016. okay so i mean help me understand that because if you're you know when vcs obviously are not happy with 10 or 20 percent year over year growth if you've raised capital how do you manage that expectation well we're not raising right now we're uh cash flow positive and we're working towards uh scaling the business through revenue and we found that you know the corporate real estate market is ready for change i think we see some significant changes with companies like wework on the other hand a lot of the corporates are very slow moving as far as real estate goes and it's generally if you look at the sierra tech category broadly uh growth rates are not huge because of the the resistance to change in the industry i think that there's a tidal wave of change coming and any kind of recession if it hits us we'll certainly change the way people think about things but for for now it's a pretty slow moving business it's one of the slowest moving businesses say compared to healthcare uh that's probably the uh the only business is even slower moving than real estate well but michael help me understand i'm not talking about new capital you're trying to raise i'm talking about your current investors you know when a vc puts money and they've got to see you know exponential growth year over year for for their model to work you're not having you know 100 200 of you over your growth you're 10 20 how do you manage those expectations with your current investors we worked very patiently with them they got into this business because they wanted to get in the ground floor you know we were in existence before proptech or cre tech was even a category now it's you know the latest and greatest and there's lots of different companies entering it um they've got a ground floor opportunity here with major customers and we're working with them to scale those customers you know each customer has grown year on year and we've added significant names each year as well how much do they expand at on average year over year talking 20 30 40 50 percent well early customers dip their toe in the water usually they'll put a couple of sites in the system get some productive results out of that and then scale to anything between five and a hundred buildings okay but just be clear to quantify that if someone signs up for you in year one for 150 000 acv right for five buildings and then they expand in year two and year two what are they typically expanding to we see between 20 and 50 growth in year two oh wow okay that's i mean that's really healthy um so 20 expansion and are you really you know i like it when people have like clear things they price from it sounds like you're really priced around one core utility metric which is number of square feet managed is that accurate exactly yeah so that means we don't have to worry about how many people are involved how many users there are how many transactions they're on the system we're purely delivering analytics to help them optimize their spend based on the square footage that they're occupying so they can tie it back to all their capex and opex budgets talk to me or at your team today how many folks uh 20 plus people here in boston and in sofia bulgaria where we have a development office oh how'd that happen are you from bulgaria my co-founder is bulgarian she had some contacts there and we found it was a location that was rich in talent and we were able to establish an office there um at the same time as we started the company so we've always been in two locations interesting very good now churn obviously is critical in any sas company what's your guys's churn today and how do you make sure to keep that low uh so high level customer service got a white glove handling of these major customers uh churn is between three and five percent it's very very low monthly or annually annually annual okay yeah it's obviously that's very low um when uh and then talk to me about growth right so you've landed these 20 customers these are very large accounts walk me through how you landed your first customer strategically how do you do it i think the first two customers are interesting so lenovo was a relationship we'd work with the executives there they trusted us um in fact they entrusted us with uh their their confidence in being willing to buy the service when we had barely even started the company why though what were you doing agency consulting work for them beforehand how did you have the relationship yeah we were consultants to them before so they knew and trusted us and we knew they had the problem we offered them the solution we did a beta site they were able to save several million dollars based on the analytics for that site and so they went to scale in year one of the business uh next customer was emc now part of dell and we did uh very significant business with emc over about four years three or four years before they were acquired by dell we're now working with dell on lenovo though real quick again how did you have the relationship what kind of consulting work were you doing with them before you had this sas play uh strategic real estate consulting with the head of global real estate okay and so what were you doing before this company you were inside of a consulting company doing real estate consulting yeah real estate consulting around uh green buildings and uh more efficient workplaces which is how we identify this inefficiency in the workplace as a problem and the lack of metrics as a barrier to solving the problem so by you know cracking that and delivering you know high value metrics uh very affordably and with robust uh data we're able to ensure our customers can make these kinds of decisions with confidence when you go into your dashboards and you look at the metrics that your 20 customers are looking at most frequently on your tool what are some of the metrics they're looking at just addictively yeah i would say utilization is the number one what does that mean though most people think of of office space so so you've got 100 desks and you've got people that say 80 people are signed if they all showed up for work you'd have 80 utilization that might sound good the reality is in most cases that would be about 30 utilization so that means you've got 100 desks and only 30 of them are occupied at peak at any given moment throughout the week throughout the year sometimes it's even less than that so customers realize that once they see that at scale they've got you know three million square feet and they're actually only using one and a half million square feet effectively they start to take action either reduce the square footage or not build more or try to find ways to increase the density of occupancy so they can get more value from what they're investing is this because lenovo signed too big of a lease or because their employees aren't showing up for work they prefer to work at home many of those things come into play so most real estate folks are conservative they prefer to plan for the future long term but uh the world has changed and increasingly employees are more mobile...