Salesseek Revenue & Funding (2024)

hello everyone my guest today is tim hampson his background in software has spanned technical sales marketing and general management in the us uk and japan tim started ibm and went on to a number of successful startups including illustra interwoven and board vantage other experience includes sybase stockholm and genesis telecommunications tim are you ready to take us to the top i am indeed all the way through the bottom so there we go good so any of these those companies i just mentioned all those you are a part of or were you ceo or founder of one of these guys so i was um uh very much uh uh founder of uh saccam and currently celseek and uh boardvantage i was part of the uh the first sort of uh management team that was brought in with the first institutional uh funding uh there and then the other sort of startups i was um essentially an early employee of those well then you've seen it you've been watching and you said okay i'm going to jump in and do sales seek now so tell us what the company does and how you make money well very simple terms we're a combined crm and marketing automation tool so if you think of tools like salesforce and tools like aliquot we kind of like both together um but we sort of optimized for maybe uh small smaller to medium-sized companies perhaps more so uh than those uh those tools are so the reasonable way we make money is like many sas vendors it's a sas subscription model so we're fully in the cloud uh very easy sort of per user per month uh pricing and we've got customers all around the world including the us and australia new zealand europe and of course the uk as well where we're based and tim what is i don't know about every customer cohort but on average which is your user pay for a seat for a month so we do have a couple of bands the the very lowest level would be um about 20 and uh that would go up to for the enterprise levels up to sort of 80 to 100 uh depending on the sort of the functionality that people were making this is interesting i want to call something out here because i'm seeing this pattern with a lot of these interviews i'm doing uh there's a lot of people that you know a lot of people think well when you go enterprise you're selling larger uh per seat or sorry larger seat deals so you're selling you know a thousand plans instead of the one-off user that's paying 20 bucks a month usually when you're selling you know a thousand seats there's a discount on the 20 price but what i'm hearing a lot of people doing or testing is actually they're adding on additional features and they're actually quadrupling the price point even at volume uh is that accurate is that what you guys are doing yeah i think that's accurate and you're right it's uh it's not just us it is actually a general theme and i think the reality is that there's a lot of functionality um that um only enterprises use and so you know it kind of doesn't make sense to to bundle that in for smaller organizations and indeed if you were trying to do that and price for it you'd be out competed by companies who basically didn't bother with that and just focused on that low end so i i think it's it's it's a function of the fact that enterprises do have more sophisticated requirements that yeah they they do have to pay more for it put this on a timeline for us when did you launch uh we launched we started very very late in 2012 and we spent the first sort of two or three years pretty much heads down in product development and it's really been the last couple of years that we've been uh sort of in in sales mode so so tim talked to me three years in product development you have to cover salary somehow how did you cover costs did you raise immediately uh we we self-funded for a lot of that we were got ourselves to be as i say sort of ramen profitable um and we also did how did you do that sorry tim if you were heads down building for three years there were three years there where you had no money right coming in so we self-funded so the founders themselves we basically kicked in um our own uh sort of money and uh were able to survive and sort of essentially non-existent salaries ourselves um and then after a few years once we actually got the product uh launched and started to get the first few customers we did take our first institutional funding from a uk uh vc called sussex place ventures okay and how much total capital have you raised to date total capital has been about uh uh just under i think four and a half four and a half five million okay and why not it sounds like i mean you guys had some success self-funding for three years um why not just keep self-funding why give in and say okay we're going to do institutional now after three years well it's um i mean it's a good question to ask because the answer is is not always um definitively one way uh for anybody and certainly not only look at different organizations so so for us we took the view that you know if we have this access to capital it means we can accelerate um scaling out and scaling up in a way that we couldn't do without that so you know the good thing about self-funding is that you kind of keep control you reduce the the amount of activity you need to do in fundraising the disadvantage is that you you probably are going to be growing at a slower rate because you just don't have access to the volumes of capital that you might do do otherwise so it's kind of a trade-off and to say i don't think there's a right answer i think it very much depends on both the company and the founders and what they want to do and everything else and and walk me through kind of where you've gone over the past you call it six years right so how many customers have you scaled to now today so we've now got about about 150 customers our largest customers are over 100 users and i think one of the biggest differences has been um not so much expanding the number of customers but how we've expanded the size of our customers so when we started out sort of three years ago most of our customers were sort of you know ones and twos then that moved to sort of fives and fives to tens and now we sort of at the sort of hundred uh hundred plus user uh mark there so for us is that an average tim sorry so of 150 logos you have it you have about an average of about 100 seats per team no it would be less than that now but but that's like a historical sort of average but sort of moving forward we are looking more like it's sort of like 100 uh users there and um i think the the advantage for us as a vendor is that the the cost of sale is is is essentially the same and in fact you could argue it's even less perhaps what can you actually quantify that for us what is the cost of sale today um i mean it depends on how much you put in there obviously you've got lead acquisition costs um sales costs um but what i would say is that um we can basically typically close a deal in in maybe somewhere between four four to eight um sort of calls and and majority of those calls are are through the web which means they're very very productive uh for clients who are locally based we often sort of see people in person we like to do that but you know as i said we've got clients all around the world and so for those it is all through through remote process so um it's just a question going through things like skype webex etc yeah well let's say you're pursuing you know a a customer right now that you know is going to be worth 80 seats for you on day one and let's assume your minimum at 20 bucks a pop right so that's going to be a 1600 a month kind of customer let's just use that customer as an example how much as a ceo would you be willing to pay for that six months of revenue 12 months of revenue what's your upfront tack on that on that kind of account uh i would say something like about nine months okay of revenue and uh you know you can look at the lifetime value of customers as being you know maybe something like three years on average or something like that how do you get to that uh how do you mean how did you get how did you calculate lifetime value of three years um well it's just on the um it's hard when you're starting out and of course you know after you've been selling for a year no one's had a lifetime value in more than one year but but generally speaking uh that that seems to be tending to what uh our lifetime value is although having said that i mean you know we've been selling for just over three years so you know uh i mean do you take your churn do you do one divided by your turn your logo churn rate typically to get that 36 month yeah i mean the other thing about churn is that uh and again i think it's true of a lot of vendors is that our churn is is very much dependent on user size and so um amongst you know we we even get some sort of singleton users um their their churn rate is very high so you know often if you look to them they'd be more like um sort of nine months or 12 months as a value whereas larger companies are you know predominantly longer than that so to some degree we can't necessarily measure the lifetime value of our largest customers because we've we've not had any churn yet so yeah talk to me in terms of you know when there's customer cohorts that pay vastly different prices a good way to measure health of a company is instead of talking about logo churn is to talk about actual revenue churn so when you look at your revenue churn over the past 12 months what has that been oh that's actually well again for the reasons i outlined just previously that that's been you know relatively low and it's been disguised by growth so so the other dynamic is that you uh you find that the you know you get an 80 user customer um they quite often will increase to you know 90 95 users in the course of a year which which means if you have you know another 10 single users drop off you still net up yeah so how that's what i'm asking though is are your it sounds like you're over 100 net revenue retention annually how far above a hundred percent uh not much i mean we're about about 100 okay about 100 so i mean that's pretty good so i mean i imagine it sounds like the pattern you're probably seeing are you have really high churning kind of these single use cases however your expansion you know logo going from 50 seats to 100 seats covers 50 lost single seats from other users right so so that's what's allowing you to keep net revenue retention about 100 exactly yeah and again for us strategically the focus is very much on getting to larger organizations and larger customers because that's where we see our growth coming and just the economics of it are just much easier for the vendor to support those what do you know you have to do let's say you get a single sign up user and you see their the email that signed up is at uber.com so you know there's opportunity for enterprise account they're a lan and expand approach what do you know you have to get that one uber employee to do in the first week they're using you to drastically increase the likelihood that you're able to expand that i think the the very first thing is to get data in there um and that for a crm typically revolves around contact data so we always try and you know make contact with people who sign up etc and make sure they're able to go through that process and we also put a lot of effort into making that process as simple as possible because i think as soon as you've got your own data in the system you can immediately start to see value because of our integrations with linkedin and also in the uk with companies house um but if you're just relying on sort of an empty bare bone skeleton no matter how good the app looks so there's no data there there's nothing to look at yup yup interesting and tell me more about the team size today what are you guys at uh right now about 20 20 staff and we're uh sales and marketing is based very much uh in the uk uh we do have support staff around the world and we also have uh i guess our developers sort of spread spread throughout europe okay so 20 folks and just out of curiosity so how many of those are dedicated to either marketing onboarding or retention um for those categories we'd have sort of five people four okay pretty pretty good and then walk me through you know you said you raised capital really to drive additional growth what are you growing at now year over year uh with well last year with last two years we've managed to uh double and this year we're not quite doubling uh but uh we're hoping to you know to get close to that so we're still uh at that sort of early stage where we're able to put in some pretty high growth rates again yeah no i was going to say i mean the main main thing for us is is that the market as you can appreciate crm is just so huge there's there's an awful lot of space for for many vendors uh as long as you can provide some sort of you know competitive niche in there you can carve out for yourself yeah what's your you know we're a couple months away from the end of i can't believe i'm saying this but from the end of 2018 what's the what's your big revenue goal for the end of 2018 what run rate do would you like to hit as a stretch goal um as a stretch goal what we what we'd like to be doing is to uh we don't really classify in terms of revenue but we'd like to be getting close to break even okay um and the reason for that is then that just gives us an awful lot more options uh in terms of you know taking more capital on or not as the case may be um but you know we're a little bit old-fashioned and that we do think that you you do fairly soon need to look at profitability how far away are you um well i'd say you know the our stretch goal would be to try and get there by the end of this year uh i think more realistically uh at some stage uh during 2019. i mean specifically tim i mean today are you burning like 100k a month or 50k a month or 10k a month how close are you to that profitability mark you know it's a lot more it's it's in the tens okay uh okay and the the um the reason why it's a little bit of a moving target is because um let's imagine we you know do really well and we did get to profitable by the end of this year we wouldn't want to stop there yeah and actually probably instead want to take more capital and burn more to actually grow more so again it's just one of these things where you know uh profitability is good but at the same time it's not actually necessarily the be all and end all because you do need to factor in growth sure and give me a sense of generally where you're at today in terms of ar run rate uh that's not something we disclose because we're still in this you know statistics are small numbers in there uh but we uh you know we're we're looking to uh as i say we're looking on a profitability basis to uh to make that match up on the on the number so it's on a monthly basis we can back into some minimums just based off numbers you did confirm earlier so 20 minimum price point you said 150 logos and you said less than 100 uh you know seats per logo on average so if we assume call it 80 seats per 150 logos that's 12 000 seats at your minimum 20 price point would put you at about 240 grand a month in revenue are you guys north of that at this point again that's not something we want to sort of disclose because this one's going to keep uh uh sort of price sorry tim just to be clear i'm just multiplying your minimum numbers so are one of those are one of the numbers are one of the numbers you gave me wrong no but those um you know on that on that mathematics yeah that would be correct okay but i'm what i'm saying is i'm taking your minimums and multiplying so so our one is the 150 logos and 80 seats per account at a minimum 20 price point are any of those numbers wrong no they're all right okay great well then i mean if that's the case then um brag a little bit how you know let me brag for you you're doing north of 240 grand a month in revenue you have to be that's enough that's that's how math works right tim if you assume all those the the the average is is 80 i said the average eighties is what we're doing right now okay so historically it's lower it's a pen in the ass when vendors are always so uh uh circumspect uh about this um well no i think it's fair by the way there's reasons to there's reasons to share and there's reasons not to share um i think a lot of people for whatever reason are self-conscious about small what they perceive as smaller numbers but i think people forget often the most viable lessons are going from zero to a million bucks in arr and everyone has to start at zero so my job is to get people to talk about it um you know what i mean so i mean when do you think i mean the lessons you've given us today are these great for companies going from call it zero to a million are you kind of yeah yeah absolutely yeah okay absolutely that that's the zone we're in there and um will you break that by the end of the year do you think do you get you get past a million ar you know um stretch goal yeah always a stretch kill all right very good i mean do you think you have to break that before you go do your next round of funding um i think i think funding is a function of growth as it were so it's it's more about um how how is your what's your trajectory looking like so it's not so much the absolute value is you know have you actually grown uh you know 15 percent month on month for the past six months you know if you can show that sort of consistent growth then then that that's the trigger for for funding more than because if you're even you're doing say you know five million air if that was only growing a few percent or even declining that would not be an attractive funding option yeah i mean but it sounds like again if you're sub 7 million an ar at this point and you're growing north of 100 percent year over year right so go back 12 months maybe you're doing 30 40 grand or something you double today to call it you know you know 70 or 80 grand the most people would say at those numbers you really want to see like you know more than two you know 200 300 percent year over year growth i mean how do you guys grow faster well there's a good good question and that's obviously um you know a major uh focus for us right now uh for us we think the main um the main thing we need to do is to get heard um one of the good things about crm is it's a huge marketplace one of the bad things about it is that of course it's um it is so huge it's hard to make yourself heard not just huge tim too like i mean hubspot's basically commoditizing it with their free crm i mean how do you compete with a free product well when you talk to hubspot users you find out it's not entirely free um and um i think um from our point of view uh we do see hubspot uh as a significant uh competitor for us but not not because it's free because like ourselves it's actually a very good integrated suite of marketing automation and crm so i think the way to look at hubspot is not free crm but rather you know an integrated crm and marketing automation tool that costs uh x yep very good let's wrap up tim with the famous five quick answers here number one what's your favorite business book uh crossing the chasm jeffrey moore number two is there a ceo you're following or studying um [Music] no actually number three what is your favorite online tool for building a business besides your own um zero the accounting package number four how many hours you sleep to get every night uh at least uh eight and fair enough and tim what's your situation married single kiddos uh married with one kid one kid and how old are you uh he's just coming up to 11. sorry you oh me i'm 54. 54. so say you look great for i mean all right take us home tim last question why do you wish your 20 year old self knew uh that is a good question um i think um i mean it's hard to net that down to just sort of one one thing um i guess um it would be um it's not about uh yeah what i would say is it's not really about your your network in the sense of who you know um i think it's more about your ability to network so um what i've often found is as i move from uh from different areas into uh different companies is that it's not so much about existing or previous uh contacts being useful it's been more about being the ability to to generate new contacts in this new context that was that was valuable guys there you have it networking in context really critical from tim founded sales seek back in 2012 after a lot of experience at very successful companies today they have about 20 people based between the uk and other remote locations they've got about 150 logos paying them uh really striving hard to break that million dollar an ar mark reach profitability and uh then uh get to the point where they can choose whatever they want to do in terms of their destiny raise capital keep growing profitably et cetera they've got over 100 net revenue retention annually to date he's willing to spend up to nine months of uh of user uh kind of revenue on acquiring that same customer landing seat sizes now in the 80 to 100 kind of team size range as they look to scale tim thank you so much for taking us to the top thank you nathan