How Servoy CEO Bob Cusick grew to $62.7M revenue and 1K customers in 2024.

hello everyone my guest today is jan ellman he's an entrepreneur and the founder of servo he's got an engineering background of experience in building great software companies he's now competing in the low code platform as a service space jan are you ready to take us to the top yes i am all right let's talk about survey what's the company do and how do you make money so i started savoy 17 years ago based on the fact that i saw that developing business applications was way too difficult and taking way too much time and so what we're doing today we created a platform that makes it three to five times quicker to create business applications both for internal corporate users and for isvs so independent software vendors that create standard off-the-shelf software okay and you're a platform as a service usually platform as a service you build you know by some degree of kind of data usage or utility is it is it kind of recurring revenue yes i would say 80 of our revenue today is is recurring that's great and what do you price around what data metrics so we price uh around the usage of the of the platform so with it typically with corporate users that can be on a per per-user basis with software companies we would typically charge as a percentage of what they charge for their products so let's pretend you're a software product and you charge 10 dollars per user then our cost would be a fraction obviously a very small fraction of of third cost that makes it very easy for software companies to get started you're not investing tens of thousands of dollars to begin with the platform but you can begin at a very low cost and you're immediately seeing results by using the product versus building everything by yourself from scratch so jen let me ask you a question i'm sure you service a wide range of customers but if i asked you to give me an average what would you say the average customer pays to use your tool per month or per year that varies because we serve two distinctly different groups on the one hand corporate clients so for example here in los angeles we have ucla as a customer within the hospital they build custom software applications using survey this is typically done at the departmental level so you only have maybe 10 20 30 users there are also corporate clients that use survey site-wide so they use it for all of their software developer then you're looking at thousands of users now if you look at software companies then because they're paying a percentage uh that can also vary depending on their own size so usually in reality it's around two percent of their total revenue so let's say as a software company you're you're building 200 000 a month then your cost to server will probably be four to five thousand so typically very much in the realm of what you'd be paying to your infrastructure uh company typically but now you get a full stack so full development testing deployment integration and rapid application development tools so jan would you say kind of that five grand per month price point that's a fair representation of kind of your minimum would you say or is that closer to an average i would say that uh it's on the low end of our average if you look at isvs it's sort of on our average when i look at corporate lines i see very good okay so i wanna put this on a timeline now you said you found i wanna make sure i heard this right you said you found the company 17 years ago that's right you were ahead of your time yes we were probably too early so the first years we had a pretty tough time in in selling this how tough and even now it was it was very hard it was finding customers one by one it was marketing was very difficult and that has gotten much better in the in the past years where now the gardeners and the foresters have defined low code as its own separate market although we feel that we are a bit in the middle um so we're not entirely in the low code space because while low code is great it's not very capable of building complex business applications it's usually only used for very small point applications our platform is typically used for broader applications on the high end you you would use tools like java and and uh and dolnet with it you can basically build anything but you need a very high budget you need a lot of people to to throw at the problem we nicely fit in the middle so this used to be the 4gl space so back in the days you had all these great 4gls that you would use to build business applications and we live there so right between the code environments on the low end and and do-it-yourself platforms on the on the high end well you survived the tough part now the mainstream is kind of more open to this kind of tool and i think there's still a lot of growth ahead that being said over the past 17 years jen how many customers have you scaled to today so today we're serving a little bit more than a thousand customers um and growing at the moment so in our first years we obviously when you're growing from one dollar to two you can easily double your through your revenues in the past five years we've sort of stabilized that at around 30 percent and that's the revenue rate at which we can grow without doing external funding we may be considering in the next few years now that the market is is much larger than it used to be to do an additional funding round and we we believe that with an additional funding run we could put the growth rate back to 100 year over year and can you give me a sentence in terms of generally speaking what your ar is at today well as a as a privately held company we don't publish our our ar other than just the metrics of how we're growing and and the number of customers that we have well something i'm doing here is wrong because if i take the thousand unless unless you're gonna totally surprise me here a thousand customers times that five thousand price point which you said is on the low end of your average if i multiply those together that puts you at five million bucks a month now maybe you are at 5 million bucks a month but i'm assuming i'm doing some math wrong yes because the the corporate clients are at a little bit lower but yeah we have that we have a healthy revenue within a company but we've been profitable since 15 years as an organization well congratulations one of the reasons yeah thank you it's and it sounds like you're bootstrapped today as well well we did one funding round in 2008 so this is 10 years ago and the idea then was in 2008 we will need a lot more funding rounds but so far we didn't have to uh to do any so so how much is it how much to date raised 1 million in in external financing everything else by the founders okay well that's good look i i think with under well i'd say i think 100 million considering you're in california you still can kind of wear your bootstrapped hat right yes what's the team size today how many people so worldwide we're with uh one uh close to 100 people today that's great and you said worldwide so i'm assuming everyone's remote so in the us we have a pretty small team because we only have a sales and implementation organization i started the company back in amsterdam and i moved here three years ago to help grow the us organization so the headquarters is still in in amsterdam but if you look at new arr then the us is now u.s and canada across the the fastest growing market we're going quicker than than europe that's great walk me through some of the other economics here in terms of keeping your customers you know more more kind of pa you know platform service companies are coming to the market how sticky is the product and obviously the way to measure that is churn what's your turn today and how do you keep that low so our tune today is less than three percent um that's a load over per month the the churn per year is three percent yeah but is it logo or revenue it is revenue and logo okay that way if your revenue if your revenue and logo churn are equal that means that basically all your customers pay the exact same amount which i know is not the case yeah i'm i'm sorry i made a mistake that's our revenue churn is negative um so a lot of current customers are growing our logo revenue has been fairly stable at three percent in the past years sorry i i have to ask better questions i meant your gross so you can't have net negative revenue churn if you're only looking at gross so you're adding back expansion obviously there but if we just look at your gross revenue churn is that what one or two or three percent something like that three percent yeah okay it is three percent revenue churn yes okay so so what that tells me if you're since your revenue churn is basically equal to your logo churn uh you're not seeing you know churn in one cohort in other words not just your expensive customers or not just your cheap customers or our churning they're kind of equally churning no matter what cohort they're in that's right yes yeah so we typically see churn at the at the start of uh getting a new customer on board uh once you're or into the platform once you've developed a bunch of applications the stickiness is is very good also because you would have to redo your your applications and for us obviously we have to stay up to date you know the moment we don't keep our platform up to date with uh like three years ago we had to go to html5 so we had to basically redo a lot of parts of the platform to support html html5 five years ago we had to deliver mobile for our customers to make sure that they could build and deliver great mobile applications we really have to work very closely to our customers and really listen to what they need and also predict what we're going to need the next years so that we can start working on those capabilities so it makes a lot of sense it sounds like you are driving expansion revenue and it sounds like as you said earlier if your expansion revenue is more than making up for that three percent lost revenue your net revenue retention is north of a hundred percent or said differently your net negative you have net negative churn is that accurate yes that's great walk me through what what your team members are focused on to make sure that these folks say sticky in other words how many of the 100 are focused on onboarding or customer success so we've three teams at servoi one is the sales and marketing team and their responsibility is getting new clients on board and marketing the the product then we have um a we call them an expert services team and they're mainly in charge of customer success so they're in charge of once somebody decides to use our product how can we make them truly successful and we really switched our thinking in the past five years from inside out uh to outside in what is really what they need and what is really how we can help them with with our product and platform and the third group within servo is r d so those are the that's the team that builds the actual platform so that the expert services team and the sales and marketing team can then deliver it to our customers and and when we go to the back to the top of the funnel jan when you look at acquiring new customers today how aggressive are you being in terms of what you're willing to pay to get a new you know customer our customer acquisition cost is is about one one year of new revenue that they bring in so in about 12 to 14 months we recover from from customers that are onboarding onto onto the platform that's great and and that one dollar you spend to get that new dollar of acv where are you typically spending that besides your people your sales team so it's uh it's a combination of uh online marketing it's a combination of shows that we do resource increasingly spend partnering we partner with a couple of technology companies one of them is progress software a company based out of boston where we help their customers to modernize on top of their existing database and and platform and also increasingly in in vertical markets so we have we're we've been quite active in healthcare so we will then spend time and money on vertical healthcare shows to exhibit there to visit there to sponsor and speak those those kind of conferences but increasingly we see it moving towards uh online spend that's great and jan you mentioned that you're considering or you would maybe consider raising additional capital here in the near future walk me through what what you think what goes through your head when you think about fundraising well there are two scenarios that are possible for us one would be to have a strategic partnership with one of the larger vendors who is not yet active in this space can you name one or two of them well as an example and without being very specific um ibm and sap and and nearly all of those vendors at dell um want to move into this market into the space of of low code software development don't have a current or don't have an up-to-date offering in terms of strategic partnerships you'd more be looking at for example large erp vendors so one pretty cool thing that we're seeing our customers starting to do is they use our platform as their own platform so imagine you're a software vendor you've built an erp and now just like salesforce you want your own forex.com you want your customers to be able to build within those software applications and that's how we designed our platform we had this vision 10 years ago we were too early but now we are seeing our partners starting to do that and for us that's an additional sales channel we see a partner an erp vendor that has maybe a thousand end customers and they start to offer survey as a platform to their customers so those erp users can build their own in-house custom applications makes sense jen is there or is there an ar target that you're waiting to hit before you seriously consider raising well that's a good question in the past two years i've been very focused on building a scalable and reproducible sales model and sales team here in the us market before that in the us we were a little bit behind we're doing okay so we don't have to be crying about the revenues but it was not very reproducible so that's the key thing that we've put in place in the past two years and we're sort of in the finishing phases of proving that and having that ready so next year would not be unlikely for us to start looking at either a strategic partner or a or classic venture capital to further accelerate the growth and with this new sales machine you know built that you've worked you know really hard to build over the past 12 months i mean what do you anticipate your kind of revenue goal being for the end of next year end of 2019 well in in in terms of growth we if we do any funding we would we would like to see our arr go back to 100 year-over-year growth compared to the 30 year of year that you're doing right now sorry sorry i didn't sorry i meant before you look at funding to make sure that you go into that funding conversation with all the leverage and all the chips what's what's your ar target you want to hit before you seriously consider raising capital well so this year we're going to do a 30 so for next year if we we're happy if we're going to hit 40 with our with our existing cash flow without external funding and then we believe we're ready to to make the next step that's great and so you know if you're doing 30 million bucks in ar this year that means about 2.5 million bucks a month and you said you're growing about 30 year-over-year today correct that's right yes that's really healthy growth for only a million bucks raised back several years ago and that means that about a year ago november 2017 you guys would be what somewhere around 1.8 million bucks a month well yes the growth has been uh healthy and but on the other hand you have to you have to keep in mind we've been doing this 17 years it's not like we started yesterday with one dollar right i like i like slow growth i i love you know what i love jan about what you've built i love that when i take your arr and i and i take your funding and i divide you have 30 times the ar versus what you've raised there are very few companies that are funded that you can say that about right so i think it's impressive i think it's great okay thank you not that my opinion matters but i think it's impressive all right let's uh let's uh wrap up here jan with the famous five number one what's your favorite business book um well my oh there's a good question i have i haven't made a list actually in in quite some what's the last one you read the last one i read is uh how to fill at nearly everything and still win big uh by by scott adams and um some don't consider it a business book but a better comic book he's just he's hysterical though he's a great writer yeah and and he he's very good in putting out how you should you should anticipate failure and enjoy it so that you can truly learn from it and i think in the technology world although we often say it embrace or fail fast and all those kind of buzzwords we still have a big fear of really doing it and really admitting i was wrong at these 10 things and i've learned something from it yeah number two is there an under the radar ceo that you're following in your town um under the radar well maybe what i'm most impressed about is is our ceo so i've been ceo of the company for 15 years and two years ago my ceo came to me and he'd been managing the company for me for about five six years and he came to me and he said i want your job i think i can do it better and that was quite shocking if you've been the ceo 15 years it's a big ego step to go down and say you know what i'll go back into doing what i'm best at which is evangelizing the company and and the product so he took over all these this whole operational role from me and it's worked out extremely well for for the company and a side benefit for me is i sleep a lot better at night without being the ceo i still get to do all the cool things how many how many hours of sleep do you get i actually sleep eight hours every night and i think everybody should it's unhealthy to sleep less than eight hours that's great third question here what billing tool do you guys use as you can imagine with survey being a software platform and with a lot of engineers in-house we built our own would i do that today absolutely not i had a sneaking suspicion that might be the answer all right and uh and what's your situation married single kiddos i'm married with no children no kiddos and how old are you i'm 43. okay jan last question here what do you wish your 20 year old self knew uh i wish my 21st hotel would know what things not to do and that's my my main lesson for anybody who's starting a company the key thing is what are the 10 things that you're not going to do because you can you can waste your time on a lot of thousands of things that you shouldn't be doing have a laser sharp focus on on what you want to achieve with your business and begin there and don't do all the unimportant things learn to say no guys 2001 survey founded again by jan here now the team is 100 people again ushering in really platform as a service probably actually a little early to market now they're really really hitting their stride with over 30 million bucks in ar on just a million raised i love the efficiency there over a thousand customers today growing thirty percent year over year less than three percent revenue churn annually and net revenue retention north of a hundred percent the economics are also healthy one dollar in in terms of cac gets you a dollar of new acv so their payback period less than 12 months again 100 people based in remote locations as they look to scale and potentially raise uh middle of 2019 jam thanks for taking us to the top thank you very much