How Silverlinecrm CEO Gireesh Sonnad grew Silverlinecrm to $54M revenue and 200 customers in 2019.

hello everybody my guest today is garish sonat he is the ceo and founder of a company called silver line crm now setting the corporate vision and mission for the companies the technology leader and cloud solutions expert with proven abilities to execute and achieve business goals greece you're ready to take us to the top yeah let's do it did i make a mistake it sounds like you might have been brought in at a later stage are you also the founder or no i'm the co-founder yeah oh you are okay very good i love that all right tell us about the company you are the reason i'm looking forward to this you are in a very very crowded space which means you must have figured out some mousetrap to allow yourself to survive and thrive and i want to learn what that mousetrap is so what's the company doing how you guys making money yeah sure so silverline is essentially a salesforce implementation shop right so what we do is we help organizations who are looking to make digital transformation moves using a crm platform like salesforce um take the best advantage of that platform and do it in a way that most uh is most advantageous for their business yep now are you is this a professional services player is there a sas component underneath it's almost entirely a professional services play so most of what we do is is just what you think about consulting work and sort of timing materials type engagements yep okay that makes a lot of sense so walk me through first off who's feeding you the sales force leads or are people like they buy salesforce they google some pain point you know they get stuck on and they find your articles i mean what which which aspect are you fitting in on well it's a little bit of all things but primarily today we are a channel based organization right so one of our sales channels if you will is salesforce itself and so making sure that we're staying very close with those teams and very close to their partner alliances teams so that when the right customer comes along they think about us first and because you can imagine someone is out there looking to buy salesforce one of the questions that they ask and one of the questions that we and salesforce recommend is that you look to help okay and so those customers are always looking for guidance who is the right customer and uh sorry who is the right service provider and how can they help me yep and so i mean how do you fit in though i mean there are hundreds of companies that would put themselves in the sales force kind of partner category for you know consulting services so how do you get leads from salesforce that's a great question and something we chose very very early on was to focus very tightly on specific industry verticals so we you know salesforce is a huge place there's a lot of things you can do from a platform we very specifically said we are experts in financial services and healthcare and life sciences and a few sub verticals underneath that and so what we have told the marketplace is if you have anything that touches any of those ideas no matter how complex we can definitely solve those problems if it's outside of that area we'll help you find the right partner it's probably not going to be us that's really smart that that is your mousetrap that allows you to survive as you can say we don't do everything but we are the best at these two so you should win almost every deal of a sales force implementation on a fintech you know company we should yeah all right very good walk me through the history here when did you launch the company what year so we started the company in uh 2009 it was formed as actually a merger of source an unofficial merger between myself and my co-founder both of us were sort of the single man sort of consulting shops running around new york city with their heads cutting off trying to figure out how to put this thing together salesforce didn't have an office in new york they didn't even have an office on the east coast at the time and uh so we were in the network in the ecosystem found each other and said hey we think there's more to this whole idea what would happen if we combine forces and went after it together that makes a lot of sense now what does that actually look like from like a captive works perspective you guys just split it 50 50 or what oh yeah well and this is something that i tell a lot of people who are thinking to do this i mean one of the things that was great my company was a little bit smaller than his by revenue but we had a little more relationships and vice versa we agreed right off the bat split it 50 50 right down the middle it helped us focus on what was necessary to grow the company as a combined unit and so you know the cap table has changed a little bit over the years but um that's how we started the company how we operated for a great majority of the time it was only super powerful so what's the team size today how many people we've got about 325 people okay 325 and then most agencies are obviously bootstrap very rather do you see one raising i assume you guys are bootstrapped right we are bootstrapped uh but we did actually take on some investment last year um uh with uh an equity partner named pamlico capital and so we basically are recapitalizing the firm for continued growth and uh it went very well how much did they put in in what in what regard how much do they invest uh well we're not it's not actually public how much they invested but uh there is they're a significant investor in silver line and sort of recapitalized us in the right way going forward well let me ask a different question um a lot of times especially you've been around for almost 10 years now when i hear stories like this i'm like oh yeah it makes sense founders want some liquidity so most of that investment is probably actually the secondary not going towards operations is that what happened here you and your founder just wanted some cash no this is a majority investment so there yes at some level that was about taking money off the table but really it was about putting the organization in the right footing so that the next 10 years uh are are backed appropriately okay um sorry i'm not following it was actually most this money you didn't sell you and your co-founder did not sell any equity in the secondary it was all going that it's all winning the companies to operations no no no sorry uh it was an equity sale and we did sell okay we did sell the equity in the company we did take some money off the table yep um and we did sort of make sure that uh you know we got the benefit for something that what we've done over the last 10 years yeah i know i think i think it's great i think it's smart i have nothing i have no qualms about this i think you it totally is well deserved no well thank you i appreciate that and we did you know that was part of it but really what it was about too is to make sure that as we as organ as founders you know had bootstrapped the company to your point and we wanted to make sure that the company could continue to grow with the appropriate amount of sort of financial backing and appropriate amount of sort of power behind it right and so we did it in a couple of we added the pamlico folks to the cap table to sort of help with that yeah no no that's great do they have a a history of getting into kind of agency companies like this or why do you like them we love them because of that specific reason they have a cloud thesis that focuses on founder-backed companies in the sas based sort of services space so they knew very well the challenges we were trying to face and they knew very well what it meant to have a founder run or found an organized company and how to help that let me be ultra specific here um this is sometimes a shortcut to getting kind of access to other companies they've invested in if you sense that you could service a massive pool of you know customers that one of their other companies have like daxco which is a financial management solutions provider they invested in was there any kind of conversation or strategic analysis by junior co-founder going if we let them invest we'll get access and be the salesforce provider for all their other investments too especially the ones like dax go in the financial management solution space no not as a primary aspect of that whatsoever i mean really it was about us putting the organization the right footing to continue to grow with the pipeline that we have now sure that would be nice you know and if there are ways that we can sort of extend our network to find new customers in different places fantastic we'll take it yeah because they help that primary strategy they do absolutely for sure absolutely very good yeah okay and then give me a general sense so if a fintech companies by the way we have a ton of sas companies that listen to the show um a lot of them are in financial services our fintech specifically if they're thinking yeah we just bought salesforce we're totally lost what is like the typical customer going to pay you for implementation i'm sure it ranges but you know typically what's it look like well right now so our focus is around sort of the mid to to to mid-high in terms of company size and so we're our our engagements are looking to be a few hundred thousand dollars okay one kind of one time like per project or is that annually or something that's kind of one time i mean certainly we structure things a lot of different ways um we always advocate for a long-term sort of uh consistent and methodical approach to realizing value on the salesforce platform uh it is a growing platform you can take much more advantage of it over time and so we do have longer term engagements but initial one-time project literally getting things up off the ground the right way you can think about it as a couple hundred thousand dollars okay fair enough and then um help me understand you know what capacity you guys can actually handle yearly so like last year are you working with like a select five clients you're working with like 500 clients uh it's somewhere squarely in the middle i think we closed about 200 deals last year oh wow i mean that's still pretty i mean that's still pretty so that's almost i mean that's a little that's like point 1.6.7 per employee that's still pretty that's higher than i would have thought it's higher and it actually actually getting lower believe it or not as we get up market and we started our company grows and our company size the client size grows and the size of the engagements grow you know we're getting uh more in that sort of top end which is a part of our design and part of our part of our growth strategy um and so that that volume number is going to go down a little bit but certainly the size of the customers growing up yeah yeah 200 customers at a couple hundred thousand bucks on engagement i mean let's say 200 grand engagement that puts you north of 40 million bucks a year in revenue is it fair to say you've broken that oh yeah when's 100 when's 100 mark come in uh three years okay that was a quick answer you this is already in your pro formas huh i got it what's gonna let you get there is it literally just going up marketing increasing the average contract size is there some other play another product line upsells what do you think's gonna get you there well one of the nice things about salesforce is as a platform the technology is continuing to grow so it offers us a lot more abilities to sort of talk to our customers about new things um i believe that we firmly believe that we can get there in in our industries of focus and financial services and healthcare are huge huge huge industries that have a tremendous amount of money that needs to be spent on on digital transformation and crm focus so not a tremendous amount of new new sort of product lines or new sort of um you know areas of business i would i foresee but it is about growing our capabilities it's about going up market to the bigger customers and it's about bringing these customers in from a variety of different angles not just our channels yep yep very interesting um most of the the most successful software companies you look at qualtrics for example they start off actually as an agency now they usually stop at like five maybe anywhere between like one and five million bucks in revenue and go oh my gosh there's a there's a sas product underneath this every one of our customers asks for this one thing we can codify it spin it out as a sas company you have resisted the urge to do that and i guess thank god you did because you built a massive agency here but you have got to have the temptation every week to spin out software companies why have you not done that or are you doing it right now well in fact we had we did it a couple of times in the beginning we didn't spin them out as companies we did build sash products we launched them on the salesforce platform and then really came to a decision point really look are we going to be a services company in a solutions firm or are we going to be a products firm and i think our driving force with with my co-founder and i was really about building custom solutions and taking the more bespoke approach yep so we still have some of those sas products that kick in you know eight to ten percent of our revenue every year and just kind of do that in a recurring fashion um we're using salesforce's app exchange as a great place to do that so it's sort of like you know the apple store for business um solutions and sales forces world so we have a sas product side of the company if you will but it's nascent and we're letting it be there because our primary focus is around the services and the solutions you're right though it is tempting you see a new solution a new product or new idea every single time what we've chosen to do is bring that into our um asset strategy which is a repeatable set of ip that we deploy to our customers going forward so instead of spinning those out as products and figuring how to sell them as as as you know box solutions we sell them as accelerators uh to get implementations off the ground more more quickly or more efficiently yeah there's a lot of um i mean with now this firm behind you and the kind of revenue you're doing first of all i imagine are you are you bootstrapped or are you sorry are you profitable or are you guys burning we're burning oh you are burning oh interesting okay like a i mean can you try and quantify that more than a million bucks a month or no no no no no no no okay no it's it's it's small but it's it's in service to the growth i mean if you think about the sales force ecosystem growth we're just we're racing to catch up yeah and stay ahead of that yeah okay good so burning less than a million bucks in terms of in terms of cash each month just i imagine probably on head count right yep yeah yeah um would you ever i mean would you ever consider a strategy where for and this is really legion for you you go like i'm looking right now at the app exchange i just searched finance there's 225 results some of these things have a ton of reviews but are not like they're they're free solutions or things like that would you ever i mean go do a roll-up strategy and buy these and really what you're buying are basically hundreds of you know enterprise leads potentially well we're we're definitely utilizing sort of an ecosystem approach to lead generation which is to sort of find competit um uh compelling sort of complementary solutions to the stuff that we build and putting them all together into one nice package and saying this is the way that you would do this um whether or not it becomes part of a roll-up strategy and actually buy them something that you know we'll be talking we can talk to the board about but um as the current strategy goes it's really about the custom solution and how what do we use as partners to sort of help get us there yeah yeah fair enough i mean i can imagine a lot of companies that sell to enterprise fintech in the two categories you're focused on going man be a strategic investor in our new startup we're serving those markets as well i mean there's all kinds of ways i think for you to exposure to the sas space if you wanted it well what we're seeing too is most of these sas companies even the most compelling and most robust ones don't actually know how to do the servicing work oh totally and they don't want it fantastic yeah they don't want it either they do offend they build a fantastic product um because they've got one or two industry folks but they don't know how to actually talk to the marketplace or they don't know how to serve them long term and so some of those are the areas that we're looking at as you know so more partnership style growth than it is about us becoming the actual provider of the software yeah yeah no that makes good sense um do you have any so let's say i use you this year 2019 i paid 300 000 to get my my instance of salesforce set up i'm a finance you know finance related company is there any are there any ongoing fees or no there are technically no ongoing fees but we definitely strongly recommend that you think about we have a managed services component to our business as well sort of long-term not just project-based work but long-term sort of looking after the health of the business and the sales force implementation which as a rule of thumb you can think about sort of 20 of your investment you can think about and you know carrying on over time and that's about again keeping the lights on with salesforce continuing to understand how you're improving and and realizing value from that investment so we we strongly ben you know strongly are recommending that and and a lot of our customers are are agreeing with that and going after it yep and then talk to me a last question here about cac so to get a new call at 200 000 your customer what's your sales look like are you are willing to spend you know what a third of that you know 10th of that what do you spend on cac well a huge majority of our uh inbound net new stuff comes from salesforce directly right so the cac is a little bit off right because we're not going direct to marketing and sort of deploying traditional business strategies to do that it's about our relationships in the channel and our account executives staying really close to the salesforce world and letting them know what we can do for them salesforce has an army of sellers if you might imagine you paid them a kickback though 10 20 30. definitely not nothing at all not at all okay interesting so you're not doing any paid spend facebook ads google ads things like that very little i mean it's just it's just more of corporate brand awareness than it is about lead gen or biz dev okay at least today i'm trying to figure out a way to quantify this without getting down to every niche my new detail i guess let me tell you this ignore what you're actually doing right now if someone is going to sign up with you for 300 000 what how aggressive would you be willing to be on that what's the max you'd spend to get that account all in fully weighted include sales people commission time all that yeah probably 20 25 i would say okay so it's very good so you kind of are baking in call it a 75 80 margin for yourself yeah that's good now if you figure out a way to get your agency margins up above kind of industry standards because you know obviously sometimes it can be pretty bad it's a challenge it's a complete challenge especially when you consider the talent war that goes on in the salesforce ecosystem the supply and demand is already way you know inverted in terms of finding great people that know how to do this work so you end up paying a lot for them um it's a lot it's you know it's looking at sort of different strategies to use our accelerators for example to to make the delivery more efficient it's about finding people in the right areas of the world that are helping to sort of buffer out the type of work that we need to do it's a it's a multi-faceted strategy for sure yeah all right very good let's wrap up here grosh with the famous five number one what's your favorite business book ooh uh right now it's probably uh dare to lead number two is there a ceo you're following or studying uh mark benioff of course number of three how many uh sorry what's your favorite online tool for building your company besides salesforce favorite online tool for building my company greenhouse number four how many hours i sleep to get every night six and what's your situation married single kiddos all the married with kiddos how many two five and two and i was just saying not wives kids all right two kids and uh curious how old are you i'm 43. all right last question what do you wish your 20 year old self knew uh my 20 year old self knew so many things uh uh just to go after it from the business perspective right i was a technologist for a long long long long time i was i was a coder i wrote a lot of code if you look at if you look at these things from a business and a customer perspective there's a lot of opportunities that open up guys go for it silverline crm decided early on they didn't want to be a sas company they went all in on agency you just say oh horrible margins doesn't work they've grown over 300 employees 200 customers per year paying 200 300 400 000 bucks a pop so north of 50 million bucks in revenue last year with eyes on 100 here in the next two to three years did a big uh we don't know what the number was but didn't have a deal with a private equity firm did a little bit of a secondary plus uh cash to fuel operations here they are burning capital less than a million dollars per month though as they look to scale in new york city and abroad again servicing it's two spec very very specific sectors uh in the salesforce app exchange garish thank you so much for taking us to the top thanks so much appreciate it