How Sage CEO Steve Hare grew to $3.8B revenue and 11K customers in 2023.

thank you Ray for kicking us off because we're recording thank you Nathan and all the founder paths are pulling us together it's a great Community been part of for several years I want to talk about three Frameworks to help you forecast and inform your board and make this interactive and come into it as I said my name is David Apple I run the mobile sash protocol at Sage The Sage is the world's largest provider model solutions to the office of the CFO and I've been part of winning the business over 2 000 clients and a lot of this is an automation about what's come from those discussions because we want to pay it forward everybody so the next 20 minutes we're going to cover three different things how to identify your targets how to identify your metrics set your targets and how to track progress it comes over at the time I want to make this interactive everybody how the Pieces come together so let's get started talking about identifying the metrics but just really quickly I'd like to know who is everybody who here is in sales and go to market a market okay who here is in finance thank you who here's a CEO or founder okay great for everybody that's coming in the first thing I want to just talk about is uh I want to put this in a story because what you really ultimately want to do is just in your story that you're telling you what's your meaningful underlying business dynamic that you're telling across these different metrics that are here I want to tell the story of the French cathedral building the 14th century in medieval France there was a cathedral building hustling down the dirt road he passed three people stacking practices and the first one what are you doing I said oh shut the grass okay it passes the second one what are you doing Mom stacking bricks to build a wall okay pass is a third person what are you doing I'm stacking bricks to build a wall in order to learn how to build a cathedral one day fast forward in the future first person instead second person is barely scribbling by anybody want to take a guess what the third person is doing I think the building cathedrals and so you earn your clients business through automating some core process and in return closed deals critical but it's only stacking breakfast if you've done it right you put in a data intelligence layer based on the information that you created in The Firm critical that's only building a wall if you really have understood from your product Market fit what's happening in the market do you understand how to help them prosecute the mission and have a shared Consciousness once executive team on the process that you're helping optimize in a way that quantifies that and that's how you help build your clients Cathedrals and it's so critical of me thinking that way what today's market uncertainty when so many contracts are getting cut or just getting lowered negotiations will be happening so you think about what is your cathedral building uh mud meaningful underlying business dynamic for stacking bricks there's the core six C's if anybody has anybody taken Ben's SAS metrics Academy of course thank you there's always one at least one customer in every room but if you have a bench world class and help and educate you on what's Happening Here but underneath all this is the core metrics that the investors are going to look at I'm happy to send the slides to anybody who wants to see it coming afterwards but then there's a lot underneath this based upon your billing model that's critical to what's actually going to happen what's the quantity of your customers what's the length of your contracts usage billing or subscription of transaction land and expand or simple deal that comes through are you young high growth are you privately buy out with a solar growth model you just have to constantly pick red pill or blue pill what it is is going to be unique about your business but whatever you're doing to tell the story it needs to be tied back to this and how revenue is coming in to what's happening with trying to how you're trying to help build the cathedral now I want to share underneath this we do a lot of work with KeyBank Capital markets they are the number one IPO investor bank for IPOs and this is 12 different firms that went public and how they calculate churn look at the different ways that people are calculating how the numbers come in the point here is you can create it your own way because right now we're about identifying where the metrics are that you want it's and it's almost a journey as opposed to the destination on coming together as an executive team on how are you going to Define walls or bricks walls and Cathedral with the clients and they'll think I love about I just point out box you can see that in the back comply ACV does anybody know what implied ACV is customers have spent over five thousand dollars a year in ARR with them they drew that line but there's that kind of flexibility in the metric that you build as long as you've done it together and that's Ray smiling because part of the SAS metrics board is to try to standard boards to bring some continuity and consistency to this how it all comes together underneath all this is your cohorts because as you grow as a company there's different stages upon the maturity that you have that we're going to talk about in the next section and as you win clients there's different reasons on why you've won their business but you want to Stack rank them so you're back to what's the meaningful underlying business Dynamic tied to financial metrics but against the cohorts of the customer that you have and this is the underpinnings of the story every year I go to the large investment Banks annual investor conferences so they just had them two weeks ago in San Francisco Morgan Stanley Goldman Sachs GMP Key Bank and because I work with a lot of the boards and directors of our clients trying to understand how they tell their story and this is the pattern upon which how they're really telling the story we could we even Tam and a couple other things for the purpose of getting this done so I just want to ask everybody because I'll make this interactive whether you want to write it down for yourself or bring it up into the group what is your cathedral building key underlying business measure that you have does anybody want to volunteer or if you just want to think to yourself and write it down or if you don't know think about how you can think for those of you that go to market leaders CEOs how can you lead that conversation with your executive team and with your board because when everything's important nothing's important but how do you really know what that one measure is in order to guide everybody and that's a central part of your story humans forget facts you'll forget most of this presentation I hope you remember the cathedral building story and I hope you think about how you apply that as the one thing that story the metric is static what's the metric for you for our business it's how do we win the billing model of our clients that's the number one thing we can do is they build an entire process of building model with us that's everything hey Drew thanks for coming let's get into section two set in your targets so we've done a lot of work and found a pattern on how companies grow or simplifying it but C product Market fit series that you prove you can sell it series B prove you can expand and keep those customers seriously and Beyond make it repeatable profitable and predictable and then a big milestone take a capital efficient model move it to Jason private products and geographers this is the Continuum that whatever it is you sell whatever your billing model is this is what your smart astute investors whether it's debt founder path or venture or private Equity this is the encapsulated additional one simple theme what it is they're looking for you to do that you need to then be able to forecast against so who here's uh zero to three million half of you just want to go in depth a little bit on this and again I'm happy to send the deck out and I'm oversimplifying the world because running the business can get included in a lot of variables but there's three things that folks are looking for do you have a good value prop is defined in the revenue growth do you understand your customer as defined as good sales cycle and starting to build a repeatable model and then can you demonstrate the value of your customers which is the average sales price ability to dictate what you think the growth of sales is going to be based on the sales price this is what investors are looking for in this stage in order to get to the next level of what it is you need to forecast for what your mud is for everybody for each of these I'm just going to ask of you based upon the stage which of these three you think is strongest on you'll need to tell me unless somebody wants to volunteer but wherever you're taking notes or something like that which of the three are you strong are you strongest on which of the three of these things you could take the most amount of work to improve and ensure you're clear as a team because I want to make this a good takeaway everybody from Hamilton the session then next stage an AR that's coming up how are you different is defined by the win rate how are you repeatable based upon the sales cycle to get to the revenue that you have and then how are you demonstrating economics with what your cap is and then what your LTD cap ratio is so back to whatever makes you specific and unique this is what people are looking for at this stage the forecast begins to be able to put in but the trick is is because there's so much variability always and certain right now it's called economic uncertainty that's out there what's happening with the pieces that come together 10 million plus are you starting to get some good Traction in your spaces the Market's starting to coalesce everybody's right Jeffrey Moore crossing the castle right in the bowling alley we're just beating each other's heads in who's coming out as a market leader they're trying to track that as a growth rate Over The Benchmark are you ready to Scale based upon have you figured out your sales velocity curve with the efficiency of your sales team and then if you have a good Financial profile rule of 40 kind of comes and goes and how critical it is but it's still so important in track and profitability who here is profitable right now by the way okay congratulations for the video people half the room profitable so as you're listening are you profitable or not this is the pieces that you want to do and again think to yourself if you're getting into this stage which of these are you strong on and which of these are you not as strong as you could be on in order to get together and come together you don't necessarily as the leader always have to have the answers but you do need to facilitate the process to have people come together to think about how they are going to measure this so back to this where are you strong where are you concerned the setting your times then it's moving the last one forecast and tracking progress there's different types of forecasts that plan your stretch and your beehang your plan is 60 likely to hit and this is what you want to do in building what your valuation is coming from against these metrics that we've talked about but this is what you want to guide the team on this is what you want to talk about with company meetings this is where the pieces are the stretch is 30 chance of beating this is the rally Target for the company around a big milestone and I want to encourage something because I've seen so many different company cultures that have come together over time this is how you reward folks for trying new things for taking a risk this is where the job becomes fun so instead of beating people over the head that experiments don't work for those who saw a non-presentation of CBN sites don't reward failure and they make failure fun but also don't punish failure for trying to take a shot in order to make the business more successful then you've got your feet hanging 10 percent likely to beat that's a dream big you've already taken the risk you're not working for 18t or Coca-Cola or something like that to work at a startup what is truly if you can really move the needle but have this talk about this reward the experiments that are coming in order to put out this and these are the three forecasts that you want against your bricks walls cathedral building underlying Dynamics based upon the stage that you're having strengths and the weaknesses that you've got and here's a classic Model there's different formal mechanics based on what your billing model is it's hard to put everything in one slide so just start to essentially visitors the closing the MRI understand what you are really costs are and there's here's five classic waves that people can forecast historical data opportunity stage the length of the sales forecasting the world's changed so much and you know I've been on calls constantly every day since Wednesday about Silicon Valley Bank for their uh many of our customers bank with them or have debt from them we use them as payment rails for one of our business lines and so underlying pieces there's so much change that's happening right now and what does that possibly indicate for with the underlying issues where they're having Silicon Valley that are kind of structural issues potentially in the fund region and Technology markets I'm not going to give them that publicly on recorded discussion if anybody wants to talk about it afterwards to spend some time because I've spent a lot of time in Silicon Valley Bank and invested on this and so I've got this because it's this is what you really need to try to apply right now the multivariable analysis because there's so much fluidity on the metrics that you've got in your business but external factors that are coming around including costs of capital and I want to pull out a spreadsheet this is one of Ben's spreadsheets because I'm really a big fan of the stuff that he's created over time for those who haven't seen it bench put a lot of different forecasts that are out there and big proponent repairs so a chance to download it to take a look at it this is his uh the multi-year forecast model that's out there and as you can see there's multiple tabs based upon the inputs that are coming in here put the pieces in all kinds of data that you can put in to have the data come in this is where slider this is the third part of the presentation on tracking progress you've identified what your measures are I can try to set some of the targets are that you want to go after you usually want to track progress that comes out of this and I want to share though back to as powerful as this is and it's a good spreadsheet that Ben has built the rub is when you're pulling data from so many different places your Tech staff becomes just a big colossal mess and you might not have to do it as the senior folks with people and your staff underneath someone has to do all the reconciliation across all the systems and then you just don't know everything's delayed there's a chance of error and you don't know which system is accurate and correct one and this is where forecasts start to get blown up I just put this in as an example of a tool that's out there is the ability to take the best of what Ben's model was and this is you scale up a little bit bigger the company becomes more sophisticated and much more variable than the third pieces are out there the ability to add in assumptions that adjust for what you think your big measures are and what your stages are it's where real sophisticated modeling comes in but there's only effective if we've done those first two things up front what are the metrics that people have mostly created a consensus on that are back to Tactical execution but then also really making the mission of the company come together and then put those in and then test them on a 60 40 plan a 30-70 plan a 1090 plan you have something to be measured against because of the first in the first part of our talk a little bit of high level strategy this is where the operational execution occurs and there's so many different ways that you can put the assumptions in but you want to make sure you're tracking all those because the black slot events and things happen outside the parameters of your control anybody seen the movie marginal cost came out right so funny I just a variety of reasons I've just rewatched it last weekend before everything happened this week but that's That's a classic uh Black Swan event and so you're the leaders how are you managing against a 60 40 37 to 1090. plan when there's so much variability and it's so hard to do in your head that's so hard to do in a spreadsheet and there's some benchmarks you can do we work with Key Bank on their annual SAS survey they also work quite a bit with Ray everybody hasn't been involved with this performance benchmarks is coming on he's got the next set of data that's coming in in order to participate in that that's a very powerful thing to participate in and get the data but the point of all this is is you're trying to pull all this together there's benchmarks that you can compare yourself against to guide the team in on how we're doing again knowing that how people calculate these are very different from that slide we show about how the 12 different companies calculate their revenue about a gross dollar churn and that dollar retention so kind of wrapping all this up we talked about three things identifying your metrics setting your targets attracting the progress of where the business came together well if anybody's interested feel free to email me at david.apple at sage.com and we've built the large slack community of hundreds of your peers who all come together to try to help each other out and just go to bit.ly slash modern SAS Finance one word even in that Community we have time for questions unfortunately oh okay well please reach out to David I mean he's had so much information to try to fit in 20 minutes pull the side thank you foreign