How Rocketrip CEO Dan Ruch grew Rocketrip to $12.6M revenue and 70 customers in 2019.

hello everyone my guest today is dan roosh he started off many years ago and called 0708 at aol and publisher services then moved on to tremor video before landing as an eir at a venture capital firm and then eventually jumping out in 2013 and launching rocket trip which is helping you get your employees behind managing and keeping your travel expenses low dan you ready to take us to the top i am all right so tell us about the company um and kind of who we should think about you with you know a lot of folks have used i think companies like travel park many have used you as well or is that the right is that the right way to think about you guys in that space no not really so we started rocket trip the thesis here is why do people make the decisions they do and how can we make employees think differently and if we can create models where employees are as equally invested in company success as the company itself then everybody wins and so rocket trip is a business travel reward platform that partners with the largest online booking tools and travel management companies in the world companies like concur like get there like carlson and bcd and others um to inject behavioral change into existing travel management solutions we're not competing with the industry and our vision takes us far beyond the boundaries of corporate travel into any area where employees have discretion over the choices that they make areas like health care and corporate citizenship community service etc and okay so how do you you're essentially in the business of making a company dollar have the employee when they're spending it make it feel like it's their own dollar right so that's a hard loop to kind of tie back because even you know it's ideally not so how do you walk me through the incentive structure the psychology behind how you set the thing up sure so so companies have policies and let's talk about travel policy because that's what's relevant right companies have travel policies for the same reason that governments have laws because if they didn't chaos would ensue right and so we need as human beings we need laws we need the boundaries to tell us what's appropriate behavior within boundaries of permissible outcomes right so uh inside an organization i have a dress code i don't really care what my employees where as long as they are you know coming to work appropriately same thing with travel policy i don't really care what employees spend or how they travel as long as they're spending it within reason and that's not a problem but it's definitely a sub-optimized equation and so if we tell our employees that over six hours they're allowed to fly business class and we've got a deal at the ritz carlton and they can stay there then why why would they stay anywhere else we haven't made it worth their while right we haven't sat down with them and said hey look you know there's a there's a base level of behavior that we expect but if you're willing to go out of your way to help us um that's really great and we'll make it worth your while same reason why our sales teams operate on commissions and commissions have acceleration plans on them why because there's a base layer of behavior that we expect out of our teams anything above and beyond they should be rewarded for and so rocket trip is really no different than a commission but it's a commission based on savings not on earnings so our ability to go to a client say hey look this is a way for you to have a conversation to your employees say we're not going to force you to not fly business class our policy allows business class we're not going to force you to stay with a friend or state an airbnb or share a room with a colleague but hey if you're willing to go that extra mile and again we're not forcing it but if you know up to you and if you're willing to do that for us we're going to make it worth your while the way we're going to do that is rocketrip is going to predict what your trip would have cost had there been no motivation to save and if you save money if you go out of your way to spend less then half of every dollar you save goes back to the company and half of every dollar you save goes back to you to invest in what you think you want to invest in what matters most to you do you care more about business class or your kids tuition so dan just to be clear let's say that i'm going on i work for a company that's using you guys um i'm going on a six-hour trip uh your algorithm or whatever you use calculates that that cost uh is going to be somewhere around i mean it's up 2 500 bucks um i then get scrapping and so you know what i'm going to say it's a 20 a night hostel on hostelworld.com i'm going to uh sit like in the back seat next to the toilet on the airplane that actually doesn't recline because it's right up against the toilet and deal to smell the whole trip your base and let's say i do it off for 1500 bucks you're saying that delta of 2000 or sorry of a thousand will be split 50 cents back to the company and i basically get a free 500 check for saving money yeah kind of the the one exception there is that we work with a company to establish the ground rules of what appropriate behavior is right maybe the company decides that they don't want you sitting in the back of the bus by the bathroom and they don't want you staying in hostile world because it's not safe so they're not willing to reward you for that behavior but they are willing to reward you if you're allowed to fly premium economy for flying coach or if you're allowed to fly business class for flying premium economy and they are willing to allow you to stay at an airbnb with discretion right it has to be an approved for work airbnb hopio location so so the company decides the parameters and our clients are large multinational fortune 500 they decide the parameters under which they're willing to reward certain behaviors and we power that reward system and how many of those folks are you working with today we've got 70 enterprise customers about 70 okay and then put this so so we talked about how you help those folks save money or their employees get incentivized what about yourself what's your guys's kind of business model is it pure play sas uh it's pure play sas for the most part yeah we've got a reward business on the other side of our business which is direct to employees but the vast majority of our the driver of our business is sas okay so you know most sas companies are billing around you know number of seats feature-based upgrading and then usually some like data and utility-based upsell as well are you using all three of those one or two or walk me through how your pricing typically works the base price layer is volume of travel under management so if a client spends you know 50 million dollars on travel a year through our platform they would pay one price if they spend 100 million on travel through our platform they'll pay another price okay got it so it's okay got it so the measurement is not miles traveled anything like it's just dollar vault you know last year's travel expense times you're probably gonna spend 20 more this year so if you're signing up with us today forecast 70 million a budget and we're going to price against that okay very cool um and so um i guess can you give me any can you give me any indication kind of how you price against that i mean is it are we talking like a thousand bucks a month on average or a hundred thousand bucks a month on average it really depends for every client's very different uh but generally speaking it's between two and three percent uh per million so it's between twenty and thirty thousand dollars per million of volume we process annually yeah okay very good so i mean by the way you know you asked an important question there so there's an important distinction sure it's based on volume so it's not necessarily it's annual or at the point in which they exhaust the volume they purchase and they purchase more yeah no look by the way there's a lot of sas companies that struggle with pricing because they can't figure out what utility metric to tie it to you're the opposite you know exactly what the utility metric is you're tied directly to it so every additional million bucks you can get a company spent through you you know which is a reflection maybe of your cs team your onboarding team etc drives direct returns for you instantly quickly you don't have to wait for an annual renewal to pop up it also drives direct returns to our clients because they know they're saving money against everybody of course of course it's all tied together now do you have those cs reps because you again you have all the incentive searcher line do you have cs reps and if so are they quota carrying you do have cs reps they are not quota carrying but they are compensated for gold based on retention so how do you do so we've had a lot of companies on with you know pushing you know 100 million bucks in arr and this is becoming a trend where the cs folks the engagement folks more and more are being somehow there's not a quota they have to but there is some kind of incentive based on driving expansion revenue or expansion usage etc can you teach us here i mean everyone is doing it a bit different now but how do you set up the kind of upside for a killer cs rep that's driving great good new engagement saving you money saving the company of the customers money etc it's a great question uh and it's actually one we're still struggling with to be honest what we think is...