SalesRoads Revenue & Valuation (2024)

hello everyone my guest today is david krieger he's the founder and president of sales roads a business to business appointment setting lead generation an sdr outsourcing company he's been named as one of the most influential leaders in sales and lead management by the slma he's he's led sales road through significant growth and the company was twice listed on the inc 5000 list of fastest growing privately held companies all right david uria takes the top yeah absolutely nathan all right so let's not bury the headline if you've if you've been in inc you've made your revenue public before what was last year reported and how much were you doing uh so well actually that was a few years ago so uh you know we've been growing since then i actually can't go into the specific numbers right now but we've been growing very nicely what was the last year that you did share because you can't get on the inc 5000 without sharing that what was last year you reported so that was 2.4 million and when 2015. okay 2.4 okay great so then now break down the story for us now people are going to listen how'd you make that money what are you working on sure so basically what we do is we um help our clients with the top of the funnel prospecting so if they're looking for more opportunities more sales leads more meetings for their sales people what we do is we do the heavy lifting of proactive prospecting going out and finding customers for them that might be interested in meeting with their sales people engaging in a discovery call and then we book that meeting to give them that introduction to be able to talk about their their pro you know their service their their product whatever it might be what percent of your customers are our sas companies so about 50 our sas companies yeah interesting so and it's been growing i was gonna say that's my audience and there's so many sas founders that i that i talk to say nathan i'm too nervous to go make the the first full-time like sdr or inside sales higher like i just want to test the system first and there's so many firms like yours that are popping up that are doing this very effectively in an outsourced kind of performance driven manner so question to you is how are you billing these sas companies is it a fixed fee or per per meeting booked or what yeah so it's a retainer model a monthly retainer model and so what because what we do is we do things a little differently than just booking the appointments basically if a company has gotten like a series b or series c they're in in their growth phase they know they've got a good product or service they have an idea who their ideal customer profile is and they're just looking to put some you know fuel on the fire you know we come in and we are our their outsourced inside sales team so we come in we we strategize with them we give them feedback we work with their marketing department and then we also get you know find out whether that is their best you know we best target pro company and whatnot and so we'll help them to pivot if they need to and if we're not seeing uh results in the direction that they've pointed us we work with them to recalibrate and so what we found is that you know by working in a retainer model and just working on a monthly basis with them to make sure they're getting the opportunities or recalibrate where they're trying to go we've been able to help them with with really you know growing their companies through our services okay so monthly retainer model um but but how do you i mean why would someone pay you like a lesser price versus way more price what like what do you price based on the number of sdrs so the number of people who are calling on their behalf okay so what would like let's just do an example someone that wants five outsource sdr's cost generally yeah so about five is about twenty thousand dollars a month okay got it so you're charging like 4k per outsource sdr something like that right yeah okay and what is your sweet spot customer how many sdrs are you typically spinning up for them yeah so usually about two sdrs so they're usually you know smaller companies that are just starting the prospecting process and then we'll grow with them so usually we start with two and then we have a number of clients who are like 10 15 at this point um but we start with a small number of sdrs just as we're getting the process going okay so would that be fair to say then two sdrs 4k a month that's 8k total that's your minimum well it's yeah it's a little more when it's a smaller a smaller group so our minimum is about 10k a month okay 10k per month got it but most of your companies you're working with you said are post series b yeah usually and we have a few that are series a and whatnot but usually series b when they're really looking for growth you know using that capital for growth yep what got you into this tell me about the launch story when'd you launch so i launched it in business school i was going to a business school at uh the wharton school and they had a business plan competition and so i've been in inside sales before and i just really my goal going into business school was to not get a job out of out of my mba and so i was just trying to figure out what i wanted to do and i've been reading at that point this was 13 years ago about the remote model which we're all kind of in right now where everybody works out of their home offices and so i love sales i loved inside sales and one of the most important parts of inside sales is having great people right and so i thought that the whole distributed model of building a call center where people could work wherever they live and i could recruit anyone you know throughout the country uh just made a lot of sense to me so i launched it 13 years ago we are 100 remote then obviously we're 100 remote now like a lot of us um and it's worked really well so launched in 2007 huh correct okay amazing and tell me about the first customer how did you get your first customer and do you remember was it the same even the same business model uh so what well it was the same business model uh so it was all outbound uh appointment setting and my first business model was the first vp of sales that i worked for at an internet startup uh a few years before i started the company and so he had a you know a company that he was working with so i obviously you know start with a lot of the people you know who trust you know you do good work and i asked him listen can you throw me a bone can you give me a contract and uh and he's like sure absolutely how many how many reps can i have i staffed two for him when we started uh started up that way i love that okay now fast forward 13 years later how many how many customers you're working with so we are still boutique and we actually want to stay that way so we have about 20 clients right now but what what we've we've found and listen this is kind of a little antithetical probably to a lot of the people that are are listening to you but we you know we help our our clients scale but what we found is that to really do inside sales well and it's complicated right it's hard to do it as an internal company right and to do it well and to do it for 20 clients is also really hard to do it well and so what we found is we want to actually limit the number of clients that we have and make sure that we make them super successful and super happy because all the work it's we don't make money for the first few months of launching something the amount of time that we put into the strategy to training the reps finding the right reps it just doesn't work unless our retention rates are really high and so what we've done is we've limited the number of companies that we work with and we just do a bang-up job with those companies and we've stayed batik and it's actually a very you know good model for ourselves and for our clients there's nothing wrong with boutique what do you like to keep your retention rate above above 90 percent annually annually yeah and that's on a revenue basis or logo basis on a revenue basis revenue yeah that's obviously a great target okay tell me more about the team how many folks are you there today uh yeah so we have about 75 uh sdrs um and another thing that we do a little differently than a lot of uh internal companies is a lot of people within the sdr role they hire people right out of college which is great and you get a lot of people who are really excited and energetic but we actually hire people that are later staged in their career love prospecting if you can believe that they love cold calling they love going out and hunting for things and they've done it successfully throughout their career and so we have people who as important as keeping our clients is keeping our employees and keeping them with us because we put a lot of time into training them you know you know showing them our processes things that have worked for for our clients throughout the industry um and so we really work on retaining our our employees as well and so the full team is 75 i know you have 75 sdrs but is that the full team you have any operations or engineers or anybody else uh yeah so that's the whole team with with coaches and and and everybody too so so coaches managers uh sales ops we have a sales option and then we have it doesn't include we have a decent sized team in the philippines not doing calling but doing all the back end lead research and things like that for us got it okay so 75 total on the team so how many are actually sdrs that are working with your customers so about 60 about 55 of those 55 to 60 so okay interesting and as an sdr i'm trying to think as you're recruiting more sdrs to work with you i could see people liking your model versus working inside of a fast growing company because it's less risk working with you maybe they have kids they're wanting to settle down and they go you know what i'm not reliant on one company anymore but i love the sdr role now i can work with you know david and get the same thing out of it is that is that accurate yeah so i think i think there's a number of uh reasons that people are like working for us so we do first of all they can work anywhere which is going to become more of a reality for a lot of companies and sas is definitely at the forefront of that we're seeing a lot of companies that are going remote first so that was been one one big draw um they also do like the variety so they get to try different things and you know we just have a culture around sdrs and cold calling prospecting and training and having that infrastructure that makes it fun they're learning every day just allows us to to create i think a pretty vibrant workforce even though we're 100 remote mm-hmm yeah interesting and would you say so how do you break up how those sales reps spend their time do you assign them to like one client or you know monday it's one client tuesday it's someone else thursday at somebody else how's that how's it work no no so we try to dedicate uh because this is hard it's hard to really understand both the the client right their value prop as well as the client's prospects right we need to understand the different buyer personas what makes you know a cto interested in that that product versus a cmo interested in another product things like that so we really try to dedicate the sdrs and keep them on one campaign or max two campaigns for a long period of time and how many i mean are they actually doing live demos or just cold calls how many are they doing per week yeah so they're not doing the discovery calls we'll set up the discovery calls and then usually from the discovery then our client will do a demo at that point um so we're really just doing cold calls to get that appointment for that first discovery call so we'll generate the interest uh with that prospect also figure out who the right prospect is because you know that's half of the battles making sure you know the right person within the right account that is a good fit for our client and so we'll do that and then we'll get them interested in in that discovery call so that the client can take it from there okay got it got it got it so how many cold calls are they making per day oh so per day on average like 150. so wow this is a unique sort of animal to be able to do 150 cold calls in a day you know you get told no most the time and still keep your emotion at a level where like i mean this is why you have co do you have like emotional coaches on your team to keep everyone at it your therapist right yes those uh the 15 that are our uh management uh five over therapists yeah um no but i mean here but it's so so true so nathan i mean there's two things that we do in that regard one is we hire the right type of person right so part of the problem that a lot of our clients have before they start working with us is they'll try to build it internally they'll build an sdr team they'll hire people out of college and a lot of times people don't realize how hard it is it's tough to hear no so many times i mean sales people in general we hear no but on the prospecting side it's like you know it's it's it's tough right but we hire people who have been doing this and they like the challenge of both figuring out who the right person is and maneuvering through a company doing the right type of research and then you know making you know getting to convince people all day even if they're hearing no more more times that they're hearing yes so having the right person who thrives on that is is really important but then we have a great culture throughout the day so we have a huddle you know in the middle of the day it's a little bit of a rah-rah we get everybody and we go over a quick metrics we pump everybody up we talk about things that they're stuck on we try to solve a few problems and then we go and then you know we have slack obviously where there's always celebrations with different appointments things like that different contests going on so we really try to create a vibrant environment that just makes it fun even if you're hearing rejection you know more than anybody would like right yeah i mean but i mean this is no small thing 55 sdr is making 150 calls a day i mean it's 8 250 calls a day i mean this is a this is a big thing well listen i mean at the end of the day you got to do all these things smartly but sales is a numbers game right so you need to make sure that you're targeting right you have the right strategy the right playbook the right cadences but you also have to have some volume and so we've set up processes that allow people to really be effective and and efficient in their calling so that they're still able to like look at a record they'll be able to understand who they're calling think about the way that they're going to position themselves uniquely for that company but then just keep the volume going because it is a numbers game what's the average number of sdrs a customer pays you to spin up so on average about three so usually yeah so and then there's a few that are are on the larger side so so i just want to run that down for a second so so three sdrs right making 150 calls a day is 450 calls a day that particular customer of yours from 450 calls how many qualified scheduled demos are they expecting so it really varies right so it varies on a few different things one is the the level of person that we're calling so if it's a cto right it's a lot harder to get that person on the phone or get them to respond to an email or we might be going after a director of sales it really fluctuates so it's anywhere from we'll get one appointment per day maybe two on the high end right to it can sometimes be two appointments a week but sometimes those appointments you know could be an enterprise client and you're getting the c-level appointment with somebody who's interested who could turn into a multi-million dollar deal for you so it really can run the gamut but we when clients talk to us one of the key things that we go over with them and it's really important for them to do both with their internal team or if they look at a company like us is to go through the metrics so we look at okay who are you targeting you know how are you positioning yourself in the marketplace let's think about how crispy your value proposition is is that going to really resonate can you differentiate yourself um and and how have you been doing it so far and then we make some estimates we take a look and ask you you know especially the sas clients what is your lifetime value of your customer or what are you you know forecasting that to be and then we work backwards to figure out what that roi is going to be because this is one of the best ways of getting great leads if you really understand your ideal customer profile and you know that they can buy at a level that you want but they need to buy enough because you know listen emails can be a lot lot cheaper inbound can be a lot cheaper but you know because there's a human component to it but this is the way to really fuel the success of certain sas companies who want to be figure out their who that prospect is reach out and like a laser beam grab them get them interested in their product and then start working dave there's a lot of sas companies that go under because their acv is not high enough to justify compensation of an sdr so if someone reaches out to you and they want to be your like a new customer they want to spin up three reps for them but they tell you their acv is x what is x where you will not take customers under that acv level because the economics don't make sense yeah so we look for a minimum of ten thousand dollars so um but minimum minimum ten thousand dollar acv yeah not what they're paying you what your people like what their product sells for to their customers right exactly yep but we will customize that even so because again it's very different based upon what their closing ratios are what you know who they're targeting and and what the industry is and how differentiated they are so we work through that but that's a good guideline yeah no it's fascinating because i mean if you have one sales rep and and i'm paying you that same ass company and i'm paying you 4k for that sales rep and they're booking even two qualified demos per week right so that's eight per month or i'm paying four thousand dollars to get those eight demos set up i've got i better close at least one of those eight obviously to make it profitable otherwise i'm underwater right right yeah so that that's that's basically how it breaks down so interesting all right have you done this all bootstrapped or did you decide to raise so i got uh i think it was three thousand five thousand dollars from from the wharton business playing competition the rest was all bootstrapped i love that and then look you told me earlier average customers paying for three account three sdrs at 4k a pop so it's 12 000 a month sort of you know acv on average or monthly ac on average across 20 customers i mean you can kind of back in that puts you like 2.8 almost 3 million bucks in arr is that about right yeah so you're very good at math aren't you man that's good well i like to see growth so that's a nice growth from 2014 i love someone building a boutique firm hopefully profitable scaling a core function every sas company needs so david let's uh let's wrap up here with the famous five number one favorite business book uh multipliers multipliers number two is there a ceo you're following are studying uh so the ceo that i'm most interested in right now is ray dalia yep ray dalio principles number three what's your favorite online tool for building your company um right now is slack slack number four how many hours of sleep are you getting every night oh i really try to get eight i think it's really important and hey i just thought of another question before we wrap up if a comp a sas company might be nervous to use you because they're going you know what if we ever go to raise another round of capital or exit the company and the and the vc or the acquirer learns that our sales function is outsourced we become way less valuable how do you counter that yeah so we've actually worked with a lot of vcs that bring us in for this and so i think that a lot of vcs understand that focus for a startup is really important and so if you're really focusing on making sure your product is really good and making sure your aes are closing at a certain rate and that that that's what you're focusing on right now and you're making that really good and taking your eye off the ball by building a whole inside sales team and trying to figure all that out at the same time um can can can be distracting a lot of times they realize that listen these guys understand that they're going to be really good at this and they're going to be really good at that and when they get to series d and you know when they've grown to a certain rate they can bring in somebody who can really run this department that they're going to you know cross that bridge don't they end up don't they end up wanting to hire your people then at that point um sometimes but with the remote model it's actually been somewhat somewhat easier because they they aren't in the the that location so we will help them transition out out of us that we have a playbook we work with them to transition and bring it in house uh but yeah are you also a recruiting firm do you help your sdrs go into companies we we don't because we do really want to keep our sdr's where possible yeah okay that makes sense let's uh uh last couple questions here situation married single kiddos uh married and kiddos okay how many kids besides the company uh two plus a dog two plus a dog all right and how old are you david i am 42. take us home uh what did you what is something you wish you knew when you were 20 uh that the um uh i wasted i i wasted three years at a company that wasn't a startup and the amount that you learn either by working at startup or doing your own is just like it's it's exponential so just i think a lot of your listeners know this since they're in sas but just don't go and do anything besides a startup or build your own startup guys david salesroads.com he has 20 customers 50 of which are sas companies scaling their sales team specifically with an sdr motion he is that sdr motion for them he's got 55 sdrs on his team on average you pay him 4k per sdr that he wants to spin up they're making 150 calls on average per day obviously your ac has to make sense to use him got to be greater than 10 000 acvs the rest he'll talk through the economics with you and make it work david thanks for taking us to the top all right thanks for having me what's great nathan