How Rifiniti CEO Michael Gresty grew 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 as you say they're working from home they may even be traveling a lot of the time or working from a train station or an airport or a car and so the the dedicated desks are not needed so many companies are moving to agile working with shared workspaces but lenovo is not you know we shouldn't single them out all our customers have this problem and many other companies do they just don't know how to solve it without good metrics you know there are turf wars internally the real estate function is there to deliver workspace the business units are enemies building empires and you know bless their socks they've got business plans that they want to um implement and succeed against but very often they build empires of space you know stockpiling for the future and when that's duplicated across 10 or 20 business units you get this massive inflation of what's really needed so we help companies get that vision see that and have real metrics so they can go and reduce the space um talk to me about onboarding so to get a new 150 000 acv customer what's your full weighted cat look like typically uh that's a number that is probably in in the low 10 to 20 000 range um over it's it's a b2b uh solution sale it's a six to 12 month sales cycle with these companies kinds of companies we have to go through infosec we have to get legal approval obviously we have to get contracting approval and then there are various data sources that need to be aligned so it works out that way onboarding is pretty quick once we get the deal done and get them started we've got customers have been up and running in seven days you know others in two to three weeks at most is it all software or is there actual physical kind of internet of things component you got to install in the workplace so the beauty of what we do is we offer a pure software play solution many customers think if they want to measure what's going on in the workplace they need to install hardware whereas in fact there are many existing hardware devices wi-fi network access control even some sensors that customers already have so we tap into those existing data sources those systems we use machine learning and data science to harmonize the different data and we yield the results without them having to install new hardware so you might look at the wire the wi-fi connection and say there's 100 desks here but today only 30 unique ips connected to the wi-fi so there's only 30 utilization something like that but we also align that with who badged in that day and whether some of the lighting sensors are telling us what's going on there what's also compelling about what we do is it's more than just who's connected we actually can triangulate the exact location of the wi-fi devices on the floor plans so we can see where the hotspots are where the people are not working that helps customers see which kinds of spaces are being used and not being used interesting michael who are you competing with uh you know we used to say business as usual do nothing because that's kind of what customers are doing but they were sometimes doing uh manual surveys they'd walk the floor with the clipboard no no but i mean software coming there's a few other software companies in this space who are your biggest software competitors so i think kellogg customers are using their iws or kafem vendors you know the uh azures that carry the um sarah views uh archie buses and others but they don't really do exactly what we do but customers are relying on them to try to get close to this problem and then there are a few companies that are trying to leverage more sensors your co-worker um and others but those sensors are at a desk level they're very hard expensive to deploy um they will have sensor failures not specifically for those vendors but in general sensors are a hard thing to do well and so customers don't generally do them at scale yep no interesting very good all right let's wrap up with the famous five number one what's your favorite business book my favorite business book is good to great number two is there a ceo you're following or studying elon musk number three what's your favorite online tool i would say slack number four how many hours i sleep to get every night i try to get eight it's more like six okay and what's your situation michael married single kids uh married with uh two kids by my current wife and two older kids okay good four kiddos and how old are you i'm 56 56 michael last question what do you wish your 20 year old self knew i'm sorry what would i what are you wishing you knew when you were 20 what i wish i'd done when i was 20 what you wish you knew when you were 20. oh what i knew when i was 20. everything i know now something specific something specific um i wish i knew a lot more about technology tech knowledge earlier on guys coming from michael again launched his company back in 2012 now serving 20 big enterprises with big footprints they paid 12 000 500 bucks a month or about 150 000 acv so doing about a quarter million bucks per month right now in revenue up from 220 grand a month just a year ago so call it 10 20 year over year growth cash flow positive 3.5 million raised team of 20 in boston remote locations 3 revenue churn annually but 20 account growth year over year so healthy growth they're spending up to call it 20 you know 10 20 grand to acquire a customer so call it four month payback period again really playing in the space of helping big brands understand how their space their leases are being utilized or desks being sat at and then they make and take action based off that michael thanks for taking us to the top special thanks for taking me inviting me take care